Ford F-150 Lightning at the 2022 New York Auto Show.
Scott’s Mill | CNBC
DETROIT – Ford Motor shares are on track for their worst day in more than 11 years after the automaker released part of its third-quarter earnings report and warned investors of $1 billion in unexpected supplier costs. .
Ford shares were trading at about $13.10 apiece on Tuesday afternoon, down more than 12%. If the losses are sustained through closing, it would wipe roughly $7 billion off the company’s market value.
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It would also be the stock’s worst percentage day since Jan. 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock lost 13.4% to close at $16.27 a share, according to the report. data compiled by FactSet.
Ford, after markets closed Monday, said supply problems have led to parts shortages affecting an estimated 40,000 to 45,000 vehicles, mainly high-margin trucks and SUVs, that have been unable to reach dealerships.
Despite the issues and the added cost, Ford affirmed its guidance for the year, but set expectations for adjusted earnings before interest and taxes for the third quarter in the range of $1.4 billion to $1.7 billion. That would be significantly below forecasts by some analysts, who projected a quarterly profit of close to $3 billion.
Ford cited recent negotiations that resulted in inflation-related supplier costs to be about $1 billion higher than originally expected.
While no major Wall Street analysts downgraded the stock in light of the update, Ford’s announcement caught several off guard. Expectations were that supply chain problems were abating. What’s more, Ford recently had been avoiding such problems better than some of its competitors.
Goldman Sachs analyst Mark Delaney said his company was “surprised by the third-quarter 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 of a surprise as broader macro news suggests supply chains have improved. gradually in recent months.
Several analysts questioned whether it was a Ford-specific problem or a red flag of further trouble for the auto industry.
In July, GM warned investors that supply chain issues would materially affect its second-quarter earnings, while 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 unfinished vehicles are expected to be finished and shipped to dealers in the fourth quarter.
Shares of the company are down more than 35% so far this year, but are still up 2% over the past 12 months.
-CNBC Christopher Hayes Y miguel flower contributed to this report.