UNITED STATES: A day after the automaker revealed that part shortages caused delivery delays and that inflation-related costs would be $1 billion higher than anticipated in the current quarter, Ford Motor Co. shares fell almost 11%.
The company had the last trade price of $13.33 and was on pace for its biggest one-day loss since the panic that the coronavirus outbreak caused in March 2020, when markets worldwide were in an uproar.
Analysts said it might take more time for automakers to recover from chip shortages after Ford’s preliminary third-quarter results, disclosed late on Monday, drove shares of competitor General Motors Co down 4.4%.
Ford announced in July that it anticipated a $4 billion increase in annual commodity expenses.
Less than a week earlier, FedEx Corp. cancelled its financial estimate due to decreasing worldwide demand, prompting the Detroit manufacturer to issue a warning.
Prior to Wednesday’s policy-making meeting, the Federal Reserve finds itself in a jam, as seen by Ford’s inflation issues and FedEx’s sluggish demand.
In its fight against decades-high inflation, it is widely anticipated that the Fed will increase rates by 75 basis points. However, investors’ concerns that the Fed’s actions would hinder the economy have recently caused its aggressive monetary policy campaign to hammer the U.S. stock market.
40,000 to 45,000 automobiles in its inventory would be missing parts, according to Ford’s assessment.
Ford confirmed its $11.5 billion to $12.5 billion adjusted earnings before the interest and taxes target for 2022. The company is scheduled to release third-quarter financial results on October 26.
Compared to the S&P 500’s 19% decline, Ford’s share price dropped 36% in 2022.