Mercedes-Benz Hits Fresh Low as Analysts Clash Over Turnaround Prospects

Mercedes-Benz shares tumbled to a new 52-week trough of €42.64 on Monday, extending a year-to-date slide that now stands at 30%. The stock was changing hands at €42.88 in afternoon trade, hovering just above that floor as a cocktail of operational setbacks and macro headwinds tests investor nerve.

The selling pressure has been relentless. The company’s net profit halved to €5.3 billion last year from €10.4 billion in the prior period, while operating earnings cratered 57% to €5.82 billion. A 27% drop in first-quarter China sales, swelling energy costs, and the spectre of fresh US tariffs have all savaged margins. The gloom was amplified by BMW’s recent profit warning, which dragged the entire German auto sector lower.

A Bonus Deferred, Tempers Rising

Inside the company, management has taken a knife to labour costs. A special transformation payment — equivalent to 18.4% of monthly salary and originally due in July 2026 — has been pushed back to 2027. The move is permitted under the collective agreement when net return on sales dips below 2.3%, a threshold the group has clearly breached. Roughly 90,000 German employees are affected, and the works council has reacted with fury, branding the unilateral decision a blow to morale. Reports that management is also discussing unpaid extensions to working hours have added to the friction.

Separately, Mercedes is trimming its North American R&D footprint. 72 staff at the Long Beach development centre in California will lose their posts from July 6, with activities being consolidated in Atlanta. Some employees have been offered transfers to Georgia, Michigan or California; others will receive severance packages.

Divergent Analyst Calls

Yet amid the carnage, one major bank has turned bullish. Jefferies upgraded the stock from Hold to Buy over the weekend, arguing that the sell-off has overshot. Analyst Philippe Houchois cited reassurance from a recent investor conference on this year’s targets and said the BMW-driven rout unfairly punished Mercedes. Still, he slashed the price target from €60 to €52 — a sign that even the bulls see limited near-term upside.

Should investors sell immediately? Or is it worth buying Mercedes-Benz?

UBS remains on the fence. Analyst Patrick Hummel reiterated a Neutral rating with a €55 target, predicting that restructuring charges will not generate new one-off surprises. The bank’s stance underscores the deep uncertainty hanging over the name.

Technical Signals and a Red-Tape Roadblock

Chart watchers are split. The relative strength index has oscillated between oversold readings of 28.1 and 30.4, suggesting the stock may be due for a bounce. Yet at roughly 21% below its 200-day moving average, the trend remains decisively bearish. The current price of €43.45 (or €42.88 at the day’s low) offers no obvious support beyond the 52-week floor.

A separate regulatory hurdle, though minor in scale, could dampen electric-vehicle adoption further. From 2026, Germany’s finance ministry will scrap the flat-rate monthly deduction for tax-free EV charging. Fleet operators and company-car drivers will instead need to document exact kilowatt-hour volumes and prices — a fresh administrative burden that the industry had not anticipated.

All eyes now turn to July 28, when Mercedes publishes second-quarter earnings. If the numbers fail to validate Jefferies’ conviction that this year’s targets are secure, the stock may test new lows before summer is out.