What Happened?

Shares of automotive manufacturer Ford (NYSE:F) fell 9.3% in the morning session after the company reported underwhelming third-quarter earnings results as its sales volumes missed. In addition, the company expects FY'24 operating income of roughly $10 billion, at the lower end of the previous guidance due to higher-than-expected warranty costs and inflation. During the quarter, Ford recorded a loss of approximately $1.2 billion from its Model E line, suggesting pricing and competitive challenges in the electric vehicle business. On the other hand, Ford exceeded analysts' revenue expectations during the quarter. This wasn't enough to get the stock up, and overall, we consider this a weaker quarter for the company.

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What The Market Is Telling Us

Ford’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 17.2% on the news that the company reported second-quarter earnings results. Its operating income and EPS missed by a large magnitude due to warranty issues and inflationary pressure on repair costs. Adding to the weakness, the Ford Model E business recorded a $1.1 billion loss due to industry pricing pressures and wholesale declines. Profitability outlook wasn't encouraging as, its full year operating income guidance missed. On the other hand, Ford blew past analysts' revenue expectations this quarter. Overall, this was a bad quarter for Ford.

Ford is down 14.2% since the beginning of the year, and at $10.43 per share, it is trading 28.3% below its 52-week high of $14.55 from July 2024. Investors who bought $1,000 worth of Ford’s shares 5 years ago would now be looking at an investment worth $1,206.

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