Intel and Stellantis Face Leadership Challenges

Stellantis (STLA) announced on Sunday, 1 December, the sudden resignation of its CEO, Carlos Tavares, effective immediately. The company expects to appoint a new permanent CEO in the first half of 2025. Just a day later, on Monday, 2 December, Intel (INTC) revealed that its CEO, Pat Gelsinger, has also retired effective Sunday, 1 December.

Both announcements surprised many. Most people expected Tavares to serve until the end of his contract in 2026, and Gelsinger's abrupt departure marked an unexpected end to his tenure, less than four years after taking the helm at Intel.

What might have driven these sudden leadership changes? How did the markets react? What implications could these developments have for traders moving forward? 

Let’s dive deeper into it:

Intel Forces Out CEO Gelsinger: What Went Wrong?

Pat Gelsinger’s nearly four-year tenure as Intel’s CEO ended under the weight of mounting challenges, underperformance, and strategic missteps that the company failed to overcome. Despite a 40-year history with Intel, Gelsinger struggled to navigate the company through an increasingly competitive landscape, particularly during the Artificial Intelligence (AI) boom.

Since Gelsinger became CEO in February 2021, Intel’s fortunes have drastically declined. Sales are projected to drop by nearly a third between 2021 and 2024, and its stock price has plunged 61% during the period as of 2 December. In contrast, the S&P 500 has risen 53% during the same period. 

Moreover, Gelsinger’s tenure was marked by an ambitious yet costly turnaround strategy. He aimed to transform Intel into a major player in contract chip manufacturing, requiring billions of dollars in investments to build new plants and ramp up production for external clients. However, these efforts were slow to yield results, with revenue continuing to decline and expenses ballooning.

Besides this, Intel’s inability to adapt to the surging demand for AI-focused chips, dominated by rivals like Nvidia, further cemented its slide from industry leadership. Intel was even replaced by Nvidia’s stock (NVDA) in the Dow Jones Industrial Average (YM) on 1 November 2024. 

Adding to Intel’s woes, reports surfaced earlier this year that Qualcomm (QCOM) considered acquiring Intel, underscoring how far the company had fallen from its position as a market leader.

As such, some note that the board and traders likely lost confidence in Gelsinger’s vision, as Intel remained stuck in a hybrid model of designing and manufacturing its own chips while competitors thrived by specialising in one or the other. 

Overall, this dual focus, along with ongoing manufacturing setbacks that preceded Gelsinger, prevented Intel from regaining its competitive edge.

Stellantis’ Leadership Crisis: What Led to Tavares’s Ouster?

Stellantis, formed in January 2021 through the merger of Fiat Chrysler Automobiles and France’s PSA Group, has faced various issues that exposed cracks in the company’s leadership alignment and strategic direction.

Carlos Tavares's resignation as CEO of Stellantis, over a year before the end of his contract, follows a tumultuous period marked by a steep decline in sales and profits, particularly in the U.S. market. 

Stellantis was criticised for producing an oversupply of vehicles that failed to align with shifting consumer preferences. This misstep left dealers burdened with unsold inventory and eroded the company’s competitive position as rivals, such as Tesla (TSLA), cut prices and captured market share.

In Europe, Stellantis faced similar challenges, including sluggish adoption of electric vehicles (EVs) and increasing pressure from cost-competitive Chinese automakers. The company’s profit warning two months before Tavares’s resignation further underscores these struggles.

Additionally, Tavares’s management style, which focused heavily on maintaining margins, reportedly created friction with dealers, suppliers, and even political stakeholders. Internally, differing views on Stellantis’s strategic direction emerged, undermining the alignment between the CEO, the board, and the company’s key shareholders—a partnership previously credited as the foundation of Stellantis’s success. (Source: The Guardian)

How Did Intel and Stellantis Stock React to the CEO News?

The market sentiment to the sudden CEO departures at Intel and Stellantis was divergent by the close of the trading day on Monday, 2 December. Intel’s stock ended the day nearly flat, dipping only 0.5%, despite an initial 4% surge in the morning. In contrast, Stellantis shares tumbled more than 6%.

While Intel stock price has significantly underperformed this year—down 52% as of 2 December—some traders appeared somewhat optimistic about the leadership change, as speculation about Intel’s manufacturing and foundry businesses now splitting seems to be growing. 

In September 2024, Intel announced its intention to spin off its foundry business into a separate subsidiary, potentially opening up new funding opportunities. The foundry unit, which produces chips for other companies, has been a substantial financial burden for the company, costing Intel roughly $25 billion annually over the past two years.

As the outgoing CEO, Pat Gelsinger was a strong advocate for keeping these business units together, his departure could now pave the way for structural and operational changes.

In contrast, Stellantis faced a harsher market reaction, with its stock price plunging more than 6%, pushing the Stellantis shares to a two-year low. This decline is likely reflecting broader negative sentiment surrounding the company’s future. 

The automaker issued a profit warning last September and seems to be grappling with various difficulties, including declining sales, intensifying competition (especially from China), a difficult transition to electric vehicles, price wars, and ongoing supply chain disruptions. These concerns have weighed heavily on Stellantis throughout the year, with its stock down 40% year-to-date—significantly underperforming its peers in the automotive sector. 

Carlos Tavares’ resignation, which added another layer of risk to a company already struggling to maintain trader confidence, might have exacerbated trader worries.

Conclusion

The sudden CEO departures at Intel and Stellantis underscore the challenges of leadership in industries undergoing rapid change. For traders, leadership changes can offer a fresh start, but the path forward for both Intel and Stellantis will depend on their ability to adapt to evolving market dynamics, so traders should remain cautious, as these transitions may bring both volatility and opportunity.