Shares of Ford Motor Co.'s stock plummeted 12% Tuesday as investors reacted to the automaker's warning that the effects of inflationary pressures and supply constraints would show up in third-quarter earnings.
The company's stock closed at $13.09 per share Tuesday. The loss represented the largest one-day hit Ford's stock has taken in more than a decade, Bloomberg reported.
The stock was down on a pre-earnings update Ford released Monday after market's close. The company warned that "inflation-related supplier costs" would end up running about $1 billion more than originally expected in the July-September period. Ford expects adjusted earnings before interest and taxes for the quarter to be in the range of $1.4 billion and $1.7 billion — down from $3.7 billion in the second quarter and $3 billion in the third quarter of 2021, and well below Wall Street analysts' consensus expectation.
The automaker also said it expects to have a "higher-than-planned" number of vehicles — between 40,000 and 45,000 — assembled but awaiting parts at the end of the third quarter due to supply shortages. The vehicles awaiting parts "disproportionately" include high-margin trucks and SUVs.
Still, Ford reaffirmed its full-year guidance of adjusted EBIT of between $11.5 billion and $12.5 billion.
The update prompted some investment analysts to lower their Q3 expectations for Ford — and appeared to serve as a surprise to some regarding the slow pace of recovery from supply-chain issues that have snarled autos and other sectors.
Shares of Ford tumbled amid a broader U.S. stock market slide Tuesday. The S&P 500, Nasdaq and Dow Jones indices all were down roughly 1%. General Motors Co.'s stock closed down nearly 6%. Tesla Inc.'s stock, however, was down only 0.1%.
Meanwhile, the Federal Reserve is again poised to raise its benchmark interest rate Wednesday as it continues its bid to tamp down high inflation.
Ford will report third-quarter results on Oct. 26.
The expected hit to Ford's third-quarter financial performance "is another gut punch to the Ford story as the Street's confidence is wearing thin on stumble after stumble," Dan Ives, senior equity analyst at Wedbush Securities, said in an email. "While many of the inflationary factors are out of Ford's control there is a worry management does not have their arms around the situation and fears are (for) further number cuts into 2023.