Ford Motor Company Shares Plunge 12% Following Q3 Pre-Announcement

Ford Motor Company (NYSE:F) shares were trading more than 12% lower Tuesday afternoon following the company’s pre-announced Q3 results, calling for adjusted EBIT ranging from $1.4-$1.7 billion, considerably below the Street estimate of $2.98 billion, citing impacts from chip and other component shortages, resulting in about 40,000-45,000 high-margin trucks in inventory manufactured without certain components.

Full 2022-year adjusted EBIT is expected to be in the range of $11.5-$12.5 billion, despite limits on the availability of certain parts as well as higher payments made to suppliers to account for the effects of inflation.

The analysts expect Q3 inflation-related supplier costs to run about $1.0 billion higher than originally expected. The analysts at Deutsche Bank said they are surprised by the announcement, since the company appeared to have weathered semis shortages better than GM, and in fact benefitted in Q2 from finishing WIP earlier than expected.

According to the analysts, investors have to understand the outlook for supply chain challenges for the rest of the year and get clarity from the company on what gives it confidence about the full year, especially its ability to offset continuously rising input costs.