As Mercedes-Benz's Buyback Spigot Dries Up, Investors Brace for a Painful Summer

Mercedes-Benz shares near 52-week low after buyback exhaustion, 7.8% weekly drop. RSI at 34.7 suggests oversold, but 200-day MA 13% above. China headwinds persist.

The German automaker's shares ended Friday at €48.00, sitting just 0.71% above the 52-week trough of €47.66 — a level that is starting to look like a trap door rather than a floor. Adding to the anxiety, the company's multibillion-euro share repurchase program is all but exhausted, removing a key source of demand that had been propping up the stock.

Friday's session delivered a 2.44% drubbing, bringing the weekly loss to 7.82%. The relative strength index has slipped to 34.7, flashing a technically stretched reading that often precedes a bounce — but bears note that the 200-day moving average at €55.45 stands a daunting 13.44% above the current price. The stock is now 22.95% removed from its 52-week high of €62.30.

A Nearly Empty Buyback Tank

Mercedes had earmarked a maximum of €2 billion and up to 96 million shares for the buyback. Through the end of May, it had scooped up roughly 37 million shares at an average price of €53.19, for a total outlay of €1.965 billion. On a purely mathematical basis, only a sliver of headroom remains. The market can no longer count on the company's own purchasing to juice the stock, and the fact that the current market price sits well below that average buyback price raises uncomfortable questions about future capital allocation priorities.

Operationally, the first quarter delivered group revenue of €31.6 billion and EBIT of €1.9 billion. The car division's adjusted return on sales was a thin 4.1% — inside the company's own target range, but hardly impressive amid persistent pricing pressure and tepid Chinese demand. A separate analysis from EY, released on Friday, underscores the broader malaise: the three big German automakers saw their combined first-quarter profits tumble 23%, while their US rivals surged 83% over the same period. Among the 19 largest global auto groups, the average operating margin has shrunk to just 3.5%, the weakest since 2020. Mercedes fared better at 6.0% on a group level, but that still falls well short of its stated ambitions.

China Headwinds and Rising Rates

The Chinese market continues to be the primary source of pain. Sales of German manufacturers there slid 16% in the first quarter, and for Mercedes, China remains its single most important market. Overcapacity across the industry, heavy investment in software development, and a sluggish ramp-up of electric-vehicle sales are all weighing on results.

The macro backdrop is hardly forgiving. The yield on ten-year German Bunds rose to 3.02% on the week, while US Treasuries reached 4.47%. For a cyclical auto stock, higher rates translate into steeper financing costs and more conservative valuations.

Technical Signals and a Glimmer of Hope

Since the start of the year, the stock has shed roughly 22%. The 50-day moving average at €51.05 sits clearly above the current price — a classic sell signal — while the RSI of 35 (in some readings, 34.7) points to oversold conditions. The moment of truth will come in the summer with the second-quarter earnings release, which investors will scrutinize for any sign that the bottom has been found.

Mercedes is not standing still. The new Mercedes-AMG GLE 53 Hybrid became available for order earlier this month, and the broader product pipeline aims to revive interest. However, with the buyback cushion gone and margins under siege from all sides, the stock's fate now depends on whether Chinese demand stabilizes, whether cost control can lift that slim 4.1% car margin, and whether the broader market mood shifts. Friday's close at €48.00 tells the story: the market is not convinced.