Ford Stock Plummets After Disappointing Earnings and Guidance Withdrawal
Ford Motor Co.'s stock experienced a significant drop of 10% on Friday following weaker-than-expected quarterly earnings and the withdrawal of guidance. This decline adds to the recent selling pressure on its high-yield bonds.
Ford decided to pull its guidance after successfully reaching an agreement with the United Auto Workers union following a strike. However, the car company also reported an adjusted loss of $1.3 billion for its EV unit, which is wider than what Wall Street had anticipated.
One of the main reasons for the disappointing performance of Ford's EVs is that customers interested in electric vehicles are "unwilling" to pay the premium prices associated with them. As a result, Ford has paused billions of long-term investments in EVs due to this perceived disconnect.
Ford stands as the largest issuer in the U.S. high-yield, or junk, market, with approximately $72.4 billion worth of outstanding bonds. The majority of its dollar-denominated bonds, amounting to $15.9 billion, are set to mature in 2026.
On Friday, these bonds experienced significant selling, resulting in a 1/4 to 1/2 point decrease in their value, according to a market source. Additionally, over the past 10 days, the bonds have also been subject to ongoing sell-offs.
Despite these challenges, Ford remains committed to overcoming obstacles in the evolving EV market. During a call with analysts, Chief Executive Jim Farley expressed the company's determination to navigate through these difficulties.
In terms of earnings, Ford reported earnings of $1.2 billion, or 30 cents per share, in the third quarter. This marks a significant improvement from the loss of $827 million, or 21 cents per share, during the same period last year.
After adjusting for one-time items, Ford earned 39 cents per share. Notably, these adjustments included a $2.7 billion impairment charge related to the investment in the shuttered Ford-backed Argo AI driverless-car company.
In terms of revenue, the carmaker reported an 11% increase to $43.8 billion.
Despite falling short of analysts' expectations, Ford's adjusted earnings of 39 cents per share on sales of $43.8 billion fell slightly below the projected adjusted earnings of 46 cents per share on sales of $43.94 billion.
Year-to-date, Ford's stock has experienced an 11% decline, while the S&P 500 has seen an 8% increase.
Graphs:
1. Ford's High-Yield Bond Issuance: 
2. Bond Price Movement over Time: 
All Rights Reserved © 2024
Post a comment