Continental Aktiengesellschaft

Continental's stock over the last five years has moved from a post‑COVID recovery and de-rating of legacy auto suppliers into a restructuring and spin-off story that is still trading as a discounted, cyclical turnaround at the current price level of €73.42.

2019–2020: Profit warnings, COVID shock

In 2019, Continental issued profit warnings and launched a major restructuring focused on its powertrain and automotive divisions, including job cuts and plant closures. This marked a structural de-rating versus pre‑2018 highs above €200. The narrative shifted from high‑quality auto supplier to restructuring‑heavy cyclical, with investors worrying about combustion-exposed assets and execution risk.

The COVID-19 shutdowns of early 2020 triggered a sharp collapse in global light-vehicle production, sending the stock toward multi‑year lows in the €40s. A sharp rebound followed as stimulus arrived and production restarted into late 2020.

2021: Post-COVID recovery, supply-chain headwinds

Global auto demand recovered through 2021 but was constrained by semiconductor shortages and logistics issues, which capped Continental's volume recovery and pressured margins despite improving pricing.

The stock traded in a wide range roughly between the high‑€60s and above €120 as investors oscillated between a "cyclical recovery" and "structural margin problem" narrative. Optimism around normalization of chip supply was offset by cost inflation. Technically, this period looked like a volatile topping phase after the strong post‑COVID rally, with failed breakouts above ~€120 and repeated reversals setting the stage for a medium‑term downtrend.

2022–2023: Inflation squeeze, stabilization, and early turnaround

Soaring energy and raw-material costs in Europe, alongside the war in Ukraine and recession fears, hit legacy auto suppliers hard in 2022. Continental's profitability came under pressure, and the stock fell back toward the low €50s–€60s region, well below sector leaders.

Investor perception increasingly framed the name as a potential value trap: optically cheap on normalized earnings, but exposed to ICE decline, European cost pressure, and execution risk in Automotive. The Tires business was seen as the main quality anchor.

Through 2023, gradual margin improvement and cost-cutting led to positive earnings per share of €5.78, a dividend of €2.20, and a year‑end share price of €76.92. This helped shift the narrative toward "early turnaround with a strong tire backbone," even though the stock still traded at a discount to pre‑COVID ranges.

2024: Spin-off story, warranty concerns, and sector headwinds

Macro for autos deteriorated again in 2024: the STOXX Europe 600 Automobiles & Parts fell 12.2% as weak demand, EV-transition costs, and China–EU tariff tensions weighed on the sector.

Continental's share price dropped from €76.92 at end‑2023 to €64.82 at end‑2024, despite slightly higher EPS of €5.84 and a proposed dividend increase to €2.50. Subdued industry expectations and inflation effects drove a first-half slide from €66.90 to €52.90.

The Q3 results and announcement of the planned spin‑off of the Automotive and Contract Manufacturing group sectors briefly improved sentiment and supported a rebound. However, concerns over possible brake-system warranties and cyclical auto demand kept the stock in a broad downtrend and sideways range between the low‑€50s and mid‑€70s for the year.

2025–early 2026: Turnaround debate and technical base formation

By 2025, the strategic plan to separate Tires and Automotive, simplify the portfolio, and focus on higher‑margin segments sharpened the equity story. Analysts explicitly debated whether Continental had become a "value trap or turnaround," highlighting upside from tire margin resilience and portfolio streamlining versus spin‑off execution risk.

The company posted solid quarterly results in 2025, with price and mix compensating for FX and volume pressures in Q3. One sharp quarterly loss reinforced the view that earnings quality remained uneven and kept the valuation at a discount.

Over the last three years the stock has formed a wide base between roughly €50 and the high‑€70s after a multi‑year decline from well above €200. Repeated rallies into the €70–€80 area have failed, while pullbacks have held above the €40–€50 support band. Within that structure, recent trading in the €60s–€70s region and the current level of €73.42 fit a "re-rating within a long base" rather than a completed bullish breakout.