Photo: Ford
In its Q3 investor guidance, Ford warned of increased costs due to inflationary pressures in the supply chain. The announcement crashed the price of Ford shares to $13.09, down by 12.3%. The Detroit automaker lost roughly $7 billion off its market value in just one day.
This was Ford’s worst day on a percentage basis since January 28, 2011. Back then, investors considered the automaker’s fourth-quarter results appalling, causing the stock to drop by 13.4% to $16.27 a share, according to data compiled by FactSet and cited by CNBC. However, today’s share value is much lower than that in absolute terms. This year, Ford shares dropped from more than $25 a share on January 13 to the lowest value of $11.06 on July 6. It bounced to $16.43 on August 16 and was valued above $15 for almost two months afterward.
Analysts were surprised by Ford’s Q3 pre-announcement, especially as Ford appeared to have weathered supply chain problems. Ford cited recent negotiations resulting in inflation-related supplier costs that will run about $1 billion higher than initially expected. Nevertheless, Ford maintained its full-year guidance.
Worse, Ford warned that roughly 50,000 vehicles are affected by parts shortages and kept in overflow parking lots awaiting the missing parts. These are primarily high-margin vehicles that haven’t been able to reach dealers. Ford says they will be completed and sent to customers in the fourth quarter.
Analysts scramble to find out whether this is a Ford-specific problem or an indication of an industry-wide problem to come. According to CNBC, GM’s CEO Mary Barra was confident that the company’s supply chain problems have been easing. Nevertheless, GM has even more unfinished vehicles in its inventories than Ford. Barra says that GM will have up to 95,000 units manufactured without certain components by the end of the year due to supply chain problems.
Analysts were surprised by Ford’s Q3 pre-announcement, especially as Ford appeared to have weathered supply chain problems. Ford cited recent negotiations resulting in inflation-related supplier costs that will run about $1 billion higher than initially expected. Nevertheless, Ford maintained its full-year guidance.
Worse, Ford warned that roughly 50,000 vehicles are affected by parts shortages and kept in overflow parking lots awaiting the missing parts. These are primarily high-margin vehicles that haven’t been able to reach dealers. Ford says they will be completed and sent to customers in the fourth quarter.
Analysts scramble to find out whether this is a Ford-specific problem or an indication of an industry-wide problem to come. According to CNBC, GM’s CEO Mary Barra was confident that the company’s supply chain problems have been easing. Nevertheless, GM has even more unfinished vehicles in its inventories than Ford. Barra says that GM will have up to 95,000 units manufactured without certain components by the end of the year due to supply chain problems.
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