Headquartered in Boulogne-Billancourt, France, Renault Group is a company that designs, manufactures, sells, and repairs engines, passenger cars, and light commercial vehicles. The company was founded in 1899 when Louis Renault convinced his older brothers, Marcel and Fernand, to establish the then Renault Corporation. Renault is very much an automobile pioneer and continues to be a major player in the industry to date. The company is a key share of Japan’s Nissan as well as an important engine supplier and minority shareholder of Germany’s Daimler AG.
Renault initially outsourced engines for its cars, but as early as 1902, the company had started to produce its own. Even in its early days, the company recognised the high marketing value of participating in racing cars, and one of its drivers won the Grand Prix of 1906. The company has cultivated a culture of innovation throughout its history, celebrating numerous milestones along the way, such as driving a sports car equipped with a turbocharged engine in Formula 1, 1977.
Like every other automobile company, Renault has faced challenges that it has had to bypass using creative solutions. The company was nationalised in 1945, but in the face of impending failure, it was then privatised in 1996, and in 1999, the historic Renault-Nissan alliance was completed. The automobile industry is known as a hotbed for mergers and acquisitions, and Renault is no exception. The merger with Nissan remains the most significant deal to date, but the company has also been the subject of a failed merger bid with Fiat Chrysler. Renault is also a willing seller, with its most notable divestiture being Renault Trucks that was sold to Volvo AB in 2000 for $1.5 billion.
Renault is a public company listed on Euronext, where it trades under the ticker symbol RNO.
Renault Stock History
After governance restructuring in the mid-1990s, Renault managed to stabilise its business, and its stock pushed higher from below €20 to around the €50-handle. The stock then picked up momentum in mid-2003 and sustained a multi-year rally that saw RNO print its all-time high at circa €125 in mid-2007.
The 2007/8 global financial crisis was particularly harsh for automobile companies, and its pressures saw the Renault stock tumble to lows of circa €10 by March 2009. The stock then recovered steadily and only managed to come close to €100 in May 2015. A period of consolidation then followed but the stock failed to conclusively break above €100 in May 2018 following a short-term rally. It then tumbled to below €20 in 2020 as the coronavirus pandemic hindered economic activity globally. It has since recovered but remains below the psychological €50-handle as of August 2021.
Renault is a willing dividend payer, but the volatile nature of its business has meant that its payouts are on and off.
How to Trade Renault Stock
Here are the factors to consider when trading Renault stock:
- Legislative and Taxation Issues
- With 40 factories, three innovation labs, and six technical centres, as well as a global workforce of over 170,000 people, Renault is a global corporation bound to face numerous legislative and taxation issues. The company serves customers worldwide, and changes in such issues in any jurisdiction could impact its bottom line.
- Global Economic Conditions
Automobiles are premium products, and their demand is very dependent on underlying global economic conditions. This is why the RNO stock has suffered heavily during economic downturns such as the 2008 Great Recession and the 2020 COVID-19-inspired Great Lockdown. On the other hand, global economic growth is capable of inspiring higher Renault stock prices.
Competition is very intensive in the automobile industry. Some of Renault’s rivals constitute the biggest corporations in the world, such as Toyota, Ford, and Tata Motors. Some of them are national car manufacturers that enjoy massive government support and market penetration in their respective jurisdictions. As well, innovation is fast and furious in the industry, with new product rollouts always on the cards. While hit products are a big boost, misses can be devastating and could even result in expensive recalls.
- Periodic Earnings Reports
The Renault fiscal year runs from January to December, and the company releases periodic earnings reports that update investors on its business health and performance. Renault investors typically watch out for metrics such as global sales, net debt, free cash flow, and future guidance. Positive numbers that beat expectations will usually inspire Renault stock higher, whereas negative numbers that miss expectations will pressure the stock lower.
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