Ford stock on pace for worst day in more than 11 years

Ford F-150 Lightning at the 2022 New York Auto Show.

Scott Mlyn | CNBC

DETROIT — Ford Motor stock is set for its worst day in more than 11 years, after the automaker pre-released part of its third-quarter earnings report and warned investors of $1 billion. unexpected supplier cost dollars.

Ford shares were trading at around $13.10 each on Tuesday afternoon, down more than 12%. If losses continue through closing, it would reduce the company’s market value by about $7 billion.

It would also be the stock’s worst day on a percentage basis since Jan. 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock fell 13.4% to close at $16.27 a day. action, according to data compiled by FactSet.

Ford, after markets closed on Monday, said supply issues led to parts shortages affecting about 40,000 to 45,000 vehicles, mostly high-margin trucks and SUVs, which failed to meet dealers.

Despite the problems and additional costs, Ford confirmed its guidance for the year, but set expectations for third-quarter adjusted profit before interest and taxes between $1.4 billion and $1.7 billion. That would be significantly below some analysts’ forecasts, which forecast quarterly profit closer to $3 billion.

Ford cited recent negotiations that resulted in inflation-linked supplier costs that will be about $1 billion higher than originally forecast.

Although no major Wall Street analyst downgraded the stock in light of the update, many were taken aback by Ford’s announcement. Supply chain issues were expected to ease. Moreover, Ford had recently avoided such problems better than some of its competitors.

Goldman Sachs analyst Mark Delaney said his company was “surprised by the Q3 pre-announcement given the progress Ford had previously made on supply chain bottlenecks.”

BofA Securities analyst John Murphy echoed those sentiments in a note to investors on Tuesday: “Ultimately, this news is somewhat surprising as broader macroeconomic news suggests supply chains have gradually improved over the past few months.”

Several analysts wondered if this was a Ford-specific issue or a red flag for additional problems for the auto industry.

In July, GM warned investors that supply chain issues would materially impact its second-quarter earnings, while maintaining its guidance for 2022. The automaker said it had about 95,000 vehicles in its inventory that were manufactured without certain components that needed to be completed. during the second half of the year.

Ford said its unfinished vehicles are expected to be completed and shipped to dealerships in the fourth quarter.

Shares of the company are down more than 35% since the start of the year, but are still up about 2% in the past 12 months.

—CNBC Christopher Hayes and Michael Bloom contributed to this report.

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