Ford stock is on track for its worst day in more than 11 years

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

Scott Millian | CNBC

Detroit – Ford Motor Stock is on its way to its worst day in over 11 years, after The automaker previously released part of the third quarter Earnings report warned investors of $1 billion in unexpected supplier costs.

Ford shares were trading at about $13.10 a piece on Tuesday afternoon, down more than 12%. If losses continue to close, it will wipe out nearly $7 billion from the company’s market value.

It would also be the stock’s worst day on a percentage basis since January 28, 2011, when the auto company’s fourth-quarter earnings disappointed investors and the stock tumbled 13.4% to close at $16.27 per share, according to data compiled by FactSet.

stronghold, After the markets closed on Monday, He said that supply problems led to a shortage of spare parts affecting approximately 40,000 to 45,000 vehicles, especially high-margin trucks and SUVs that were unable to reach dealers.

Despite the problems and the additional cost, Ford confirmed its guidance for the year but set a forecast for adjusted third-quarter earnings before interest and taxes to be in the $1.4 billion to $1.7 billion range. That would be much lower than the expectations of some analysts, who had forecast quarterly profit close to $3 billion.

Ford cited recent negotiations that have led to supplier costs associated with inflation nearly $1 billion higher than originally expected.

Although major Wall Street analysts did not downgrade the stock in light of the update, many were surprised by Ford’s announcement. Expectations were that supply chain problems were receding. Moreover, recently Ford has been avoiding such problems better than some of its competitors.

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Goldman Sachs analyst Mark Delaney said his company was “surprised by the advance announcement for the third quarter given Ford’s previous progress on supply chain bottlenecks.”

John Murphy, an analyst at Bank of America Securities, echoed those sentiments in a note to investors on Tuesday: “At the end of the day, this news is somewhat surprising as broader macro news suggests that supply chains have gradually improved over the past few months.” .

Many analysts wondered if this was a Ford problem, or a red flag for additional problems for the auto industry.

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

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

The company’s stock is down more than 35% since the beginning of the year, but is still up about 2% in the past 12 months.

– CNBC channel Christopher Hayes And the Michael Bloom Contribute to this report.

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