Ford Stock Plummets as Supply Chain Woes Cost Company $1 Billion

Ford Motor Company shares plummeted on Tuesday after previously announcing supply chain and inflation issues will cost the company $1 billion in the third quarter.

The company’s announcement raises questions about whether industry-wide supply chain issues persist.

Ford (F:NYSE) shares opened at $14.11 on Tuesday but fell to $13.38 an hour later. Shares in automaker Dearborn closed the day at $13.09.

Supply chain issues have resulted in Ford placing 40,000 to 45,000 high-margin and high-demand trucks and SUVs to remain in inventory at the end of the third quarter due to a shortage of suitable parts to complete and sell the vehicles to dealers.

Ford also hinted in Monday’s earlier announcement that rampant inflation has made certain parts expensive to buy.

The company expects to be able to sell the vehicles to dealers in the fourth quarter.

With the vehicles not yet ready to be sold in the market, Ford adjusted its earnings before interest and taxes (EBIT) to between $1.4 billion and $1.7 billion in the third quarter — much less than Wall’s estimates Street of $3 billion, according to Yahoo Finance.

Despite the grim news, Ford still expects full-year 2022 EBIT to be between $11.5 billion and $12.5 billion.

Bill Ford (C), Executive Chair of Ford Motor Company, addresses the media following the debut of the next-generation 2024 Ford Mustang at the North American International Auto Show in Detroit, Michigan September 14, 2022. (GEOFF ROBINS/AFP via Getty Images)

According to CFRA analyst Garrett Nelson via MarketWatch, Ford’s announcement is a likely indicator that “auto parts shortages and supply chain issues are ongoing.”

Ford’s rival General Motors (GM) faced similar problems in the second quarter, saying in July it had 95,000 vehicles in stock due to a shortage of components, according to CNBC. GM also told investors that it expects all vehicles to be available for sale to dealers in late 2022.

Whether this is a Ford-specific issue or an industry-wide issue remains to be seen.

Shares in GM and Tesla also fell on Tuesday.

A recent National Association of Manufactures survey for Q3 2022 found that 78.3 percent of top manufacturers in the manufacturing industry cited supply chain disruptions as the top vanity challenge. Only 10.8 percent believe there will be an improvement by the end of the year.

More than three-quarters of respondents also say that rising commodity costs due to inflation are one of the top business challenges.

Follow Ethan Letkeman on Twitter at @EthanLetkeman. Ford Stock Plummets as Supply Chain Woes Cost Company $1 Billion

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