Shares of Ford Motor took a significant hit, leading to the company’s worst day since 2008. The automotive giant’s performance sent shockwaves through the industry, impacting other major U.S. automotive stocks.
A Tough Day for Ford
Ford’s shares plummeted 18.4%, closing at $11.16 on Thursday. This marked the stock’s worst daily decline since 2008 and the second-worst performance among S&P 500 companies. The downturn followed a disappointing earnings report, with the company missing Wall Street’s bottom-line expectations due to recurring warranty issues.
Industry-wide Impact
General Motors and Stellantis also experienced notable declines after their earnings reports. GM’s shares closed at $44.13, down 5%, and fell 8.6% over the week despite surpassing Wall Street’s second-quarter expectations and increasing its annual guidance. Investors were concerned about pullbacks in growth areas and potential earnings peaks.
Stellantis, led by CEO Carlos Tavares, reported disappointing first-half results due to ongoing North American operational issues. The company’s shares dropped 7.7%, closing at $18.09, near a 52-week low. Despite the setbacks, Stellantis reconfirmed its 2024 guidance, aiming for a double-digit adjusted operating income margin and substantial capital returns to investors.
Tesla’s Performance Amid the Decline
Tesla, another major player in the automotive market, reported weaker-than-expected quarterly earnings, leading to a 12% drop in shares on Wednesday. Despite a modest 2% increase on Thursday, the stock remains down 10.7% in 2024.
Wall Street’s Reaction
Wall Street analysts expressed mixed feelings about Ford’s performance. Morgan Stanley’s Adam Jonas maintained Ford as the firm’s “top pick” while downgrading GM from overweight to equal weight. Jonas acknowledged the challenges Ford faces but remained optimistic about its potential. “Many of the challenges we believe are within management’s control,” Jonas noted.
Ford’s Future Outlook
Despite the significant setbacks, Ford executives remain committed to their 2024 guidance, projecting adjusted earnings before interest and taxes (EBIT) between $10 billion and $12 billion. The company is focused on addressing its warranty issues, which added $800 million in unexpected costs in the last quarter.
The recent downturn for Ford and other automotive giants highlights the industry’s volatile nature. As investors react to earnings reports and future guidance, the market reflects skepticism and uncertainty. Ford, GM, Stellantis, and Tesla must navigate these challenges carefully to regain investor confidence and stabilize their stock performances.
Despite the current turmoil, companies strive to meet their projections and deliver value to their shareholders. The coming months will determine their success and stability in a competitive market.
