Ford Motor Company is leading a significant decline in major U.S. automotive stocks this week following disappointing earnings results and growing investor skepticism regarding future performance. Ford shares closed Thursday at $11.16, down by 18.4%, marking the stock’s worst daily decline since 2008 and making it the second-worst performer among S&P 500 companies. The steep drop was primarily due to the company missing Wall Street’s bottom-line earnings expectations, driven by recurring warranty issues.
Shares of General Motors (GM) and Stellantis also fell notably after reporting their quarterly results. Meanwhile, Tesla saw a 2% increase on Thursday following its largest daily decline since 2020 on Wednesday.
The traditional Detroit automakers—Ford, GM, and Stellantis—faced declines partly due to industrywide uncertainty, but individual company issues played a more significant role. GM closed Thursday at $44.13, down 5%, and has fallen 8.6% for the week. Although GM outperformed Wall Street’s expectations for the second quarter and increased its yearly guidance, investors were concerned about pullbacks in growth businesses, diminishing upside potential for the latter half of the year, and fears that the company’s earnings power may have peaked.
Stellantis reported disappointing first-half results, primarily due to ongoing issues in its North American operations. Shares of Stellantis closed Thursday at $18.09, down 7.7%, trading near a 52-week low. Despite these challenges, Stellantis reconfirmed its 2024 guidance, which includes a double-digit adjusted operating income margin, positive industrial free cash flow, and at least €7.7 billion in capital returns to investors through dividends and buybacks. CEO Carlos Tavares acknowledged the tough industry conditions and emphasized the need for hard work to deliver expected performance.
Ford executives echoed similar sentiments while reconfirming the company’s 2024 guidance, despite missing adjusted earnings per share expectations by 21 cents. The automaker reported an additional $800 million in unexpected warranty costs compared to the prior quarter. Ford’s 2024 guidance includes adjusted earnings before interest and taxes (EBIT) of between $10 billion and $12 billion.
Several Wall Street analysts expressed frustration over Ford’s reemerging warranty costs but remained optimistic about the company’s underlying business operations. Notably, Morgan Stanley’s Adam Jonas maintained Ford as the firm’s “top pick” while downgrading GM from overweight to equal weight, despite GM’s strong quarter.
Shares of Tesla, the U.S. leader in electric vehicles, closed down 12% on Wednesday after reporting weaker-than-expected quarterly earnings and another drop in automotive revenue. Tesla’s stock is down 10.7% in 2024, including a 7.9% decline this week through Thursday’s close.
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