In this week’s Tuesday Ticker, a Canadian auto parts giant avoids fallout following its founders convictions for sex crimes, an OEM reveals its plans to develop autonomous vehicles and much more!
Founder fallout
Magna International Inc. has seen its stock price lift even as its founder awaits sentencing for one count of sexual assault and one count of indecent assault.
On June 19, Ontario Superior Court Justice Anne Molloy convicted Frank Stronach on charges stemming from incidents dating to the late 1970s and early 1980s. He was acquitted on several other charges and faces a separate trial next year. Sentencing is scheduled for September.
Stronach founded Magna in 1957 and built the company into one of the world’s largest automotive suppliers. The Aurora, Ont.-based business manufactures body structures, seating systems, powertrain components, mirrors, electronics and advanced driver assistance systems for automakers including General Motors, Mercedes-Benz and Stellantis.
Control of Magna passed from Stronach in 2010 following a corporate restructuring. He stepped down as chairman in 2011 and has not held a role with the company since. Magna is now led by chief executive officer Swamy Kotagiri and board chair Lisa A. Brown.
Investors appeared unconcerned by any reputational risks stemming from the convictions. As of midday June 22, Magna shares rose 1.6% to US$66.38 from the previous close of US$65.35.
Following the ruling, Stronach lawyer Leora Shemesh stated her client was disappointed by the verdict and intends to appeal.
Fleet partnership
Element Fleet Management Corp. shares surged after the company announced a multi-year partnership with Waymo.
On June 15, officials at the Toronto-based fleet management and mobility services provider announced it will provide fleet management and operational services for Waymo’s autonomous vehicle fleets. The work will begin with an initial deployment in San Diego before expanding to other markets.
In a June 15 press release, David Madrigal, executive vice-president and chief commercial officer at Element, stated, “This partnership combines Waymo’s industry-leading autonomous technology with Element’s global expertise in fleet management and operations.”
The company manages more than 1.5 million vehicles globally for corporate, government and institutional customers. Following the announcement, Element shares rose 3.7% to $27.99 from $27.00.
Buyback boost
AutoZone Inc.'s board has authorized another US$1.5 billion in share repurchases.
The Memphis, Tenn.-based retailer and distributor of automotive replacement parts and accessories announced the authorization June 16. The move brings total share repurchase authorizations to US$42.2 billion since AutoZone began the program in 1998.
A share repurchase allows a company to buy back its own stock. In a press release, Jamere Jackson, chief financial officer at AutoZone, said: “Our disciplined capital allocation approach continues to allow us to generate strong free cash flow, invest in growth, and increase our share buyback authorization while maintaining investment grade credit ratings.”
While buybacks are intended to reward continuing investors by driving up demand on stocks, the move doesn't appear to have had an immediate impact. As of midday June 22, AutoZone shares fell 3.4% to US$2,960.72 from the previous close of US$3,064.48.
AutoZone operates 7,856 stores across the United States, Mexico and Brazil. Its commercial program supplies parts and credit to repair garages, dealerships, service stations, fleet owners and other accounts. AutoZone also owns ALLDATA, which provides diagnostic, repair, collision and shop management software.
Autonomous Excitement
An OEM is entering a partnership to develop advanced robo-taxis.
Stellantis N.V. shares gained after the automaker announced a new autonomous vehicle partnership with Wayve and Uber.
The Amsterdam-based automaker of Chrysler, Dodge, Jeep, Ram, Fiat, Peugeot and Alfa Romeo vehicles announced on June 17 that the three businesses will explore Level 4 driverless robotaxi deployment.
Stellantis will provide L4-ready vehicle platforms, Wayve will provide artificial intelligence driving software and Uber will provide access to its mobility network.
Level 4 autonomy refers to vehicles designed to operate without a human driver under defined conditions. Those vehicles rely on cameras, radar, sensors and software systems that can affect scanning, calibration and future repair procedures.
In a June 17 press release, Ned Curic, chief engineering and technology officer at Stellantis, stated, “By combining our L4-ready platforms, designed from the ground up for safe and efficient driverless operation, with Wayve’s adaptive AI and Uber’s global network, we are accelerating the deployment of autonomous vehicles that meet real customer needs.”
Investors reacted favourably to the news. As of midday on June 22, Stellantis shares rose 1.7% to US$6.45.
Software Sold
A Tokyo-based semiconductor supplier is acquiring an embedded software development firm.
On June 17, Renesas Electronics Corp, which serves the automotive, robotics and industrial markets, acquired embedded software developer Pictorus, which develops embedded softwares related to vehicle diagnostics, advanced driver assistance systems and electronic control systems.
Pictorus, based in Oakland, Calif., develops software tools used to design, test and deploy embedded systems. Renesas said the acquisition will support Renesas 365, its platform for electronics system development.
Embedded software plays a growing role in vehicle diagnostics, advanced driver assistance systems and electronic control systems.
In a press release, Pictorus chief executive officer Adam Sullivan stated, “What excites us most about joining Renesas is how strongly that vision aligns with the direction of the Renesas 365 platform.”
Investors reacted warmly to the news. Following the acquisition announcement, Renesas American depositary shares rose 5.2% to US$14.50 from US$13.78.
