After the automaker pre-released a portion of its third-quarter earnings report and informed investors of $1 billion in unforeseen supplier expenses, Ford Motor’s stock had its worst day in more than 11 years.
Ford’s stock fell 12.3% on Tuesday to close at $13.09 per share. The market value of the Detroit manufacturer was reduced by about $7 billion.
According to data gathered by FactSet, it was also the company’s worst day on a percentage basis since Jan. 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock lost 13.4% to close at $16.27 per share.
Approximately 40,000 to 45,000 cars, mostly high-margin trucks and SUVs that haven’t been able to reach dealers, are affected by component shortages, according to Ford, which was announced after the markets closed on Monday.
Ford maintained its annual guidance despite the issues and additional costs, but it projected third-quarter adjusted profits before interest and taxes to be in the $1.4 billion to $1.7 billion range. That would fall far short of some analysts’ predictions, which called for a quarterly profit closer to $3 billion.
Ford noted recent discussions that caused supplier costs due to inflation to be nearly $1 billion more than anticipated.
Despite the fact that no significant Wall Street analysts downgraded the stock as a result of the update, several were taken aback by Ford’s disclosure. It was anticipated that issues with the supply chain would get better. Additionally, Ford had been avoiding these issues more recently than some of its rivals.
According to Goldman Sachs analyst Mark Delaney, given the progress Ford has previously achieved on supply chain constraints, his company was “surprised by the 3Q pre-announcement.”