Ford Motor Company had its worst trading day in over 11 years on Tuesday, falling by 12.3 percent and closing at $13.09 per share. The lower share prices amounted to $7 billion of Ford’s market value being lost. Ford recently released part of its third-quarter financial report, warning investors that the company had $1 billion more in supplier costs than it had expected.
After Wall Street closed on Monday, Ford said that supply issues have created shortages where parts are concerned, impacting 40,000 to 45,000 vehicles, including the company’s SUVs and high-margin trucks. The absence of those necessary parts has meant that the vehicles aren’t making it to dealers.
But, Ford reaffirmed its full-year guidance in spite of the added costs and ongoing problems. However, the company set third-quarter expectations for adjusted earnings below analysts’ predictions. Ford is expecting its adjusted earnings for the coming quarter to be between $1.4 billion and $1.7 billion. Analysts had been forecasting nearly $3 billion in quarterly profit.
Despite the update, the Dearborn, Michigan-headquartered automaker’s stock managed to avoid being downgraded by Wall Street analysts. Still, many were caught off guard with most believing that supply chain issues had eased and Ford was faring better than many of its competitors.
Mark Delaney, a Goldman Sachs analyst, said the firm was “surprised by the 3Q pre-announcement given the progress that Ford had previously made on supply chain bottlenecks.”
Other analysts were trying to determine whether the quarterly results were part of a broader issue for the automotive industry overall, or if the problem was specific to Ford.
General Motors CEO Mary Barra acknowledged to CNBC that supply chain issues have been improving.
Barra said, “We are seeing an improved situation. We keep working, solving issues, looking for efficiencies as a normal course, and we’re going to continue to do that.”
Barra also said that GM is expected to add about 95,000 completed vehicles to its inventory as planned by the end of the year. The vehicles were manufactured without some parts because of bottlenecks in the supply chain.
GM told investors in July that supply chain woes would impact its second-quarter earnings, but the company maintained its full-year 2022 guidance.
Ford expects that its unfinished autos will be completed and at dealers by the fourth quarter.
T.R. Reid, a spokesman for the automaker, said that Ford will deliver on its Ford+ restructuring plan.
“Markets are efficient over time. We’ve got a great plan at Ford+ to create value for customers, and investors, and other stakeholders over time. It’s our obligation to execute against it and create that opportunity,” Reid said.
For 2022, Ford shares are down by more than 36 percent. But, over the past 12 months, shares have seen about a 2 percent increase.