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Ford, GM, Stellantis Stocks Plummet After Disappointing Earnings Reports
Ford Motor Company is leading a sharp decline in major U.S. automotive stocks this week, driven by unsatisfactory financial results and investor doubts about future performance. In early trading on Thursday, Ford's shares plummeted by over 17%, marking a trajectory toward its steepest drop since 2009. This decline followed the company's failure to meet Wall Street's earnings projections, primarily due to warranty issues, which have been a recurring challenge for the automaker.
General Motors and Stellantis also experienced significant declines following their earnings reports this week. Despite surpassing Wall Street's expectations for the second quarter and raising its annual projections, GM's shares fell approximately 7%. Investors expressed concerns over declines in growth sectors, diminishing prospects for the latter half of the year, and worries that the automaker's profitability may have reached its peak.
Stellantis, on the other hand, presented "disappointing" results for the first half of the year, primarily due to persistent troubles in its North American operations. The company's shares, listed on the NYSE, dropped nearly 10% in the morning, nearing a 52-week low of $17.57 per share set in August. Despite these ongoing challenges, Stellantis reaffirmed its guidance for 2024, which includes a target for double-digit operating income, positive free cash flow, and a commitment to return at least 7.7 billion euros to investors through dividends and stock buybacks.
Ford executives echoed these sentiments while reaffirming their guidance for 2024, despite reporting adjusted earnings per share that fell short by 21 cents. The company also disclosed an unexpected $800 million in warranty costs compared to the previous quarter. Ford's 2024 forecast includes adjusted earnings before interest and taxes (EBIT) ranging from $10 billion to $12 billion.
Numerous analysts on Wall Street expressed their dissatisfaction with Ford's recurring warranty expenses; however, many maintained an optimistic outlook on the company’s fundamental business operations. Notably, Adam Jonas from Morgan Stanley kept Ford as the firm’s top pick while downgrading GM from overweight to equal weight, despite GM's impressive quarterly results.
Shares of Tesla, the leading electric vehicle manufacturer in the U.S., closed down 12% on Wednesday after reporting quarterly earnings that fell below expectations, alongside another decline in automotive revenue.
Original Article: https://www.cnbc.com/2024/07/25/ford-gm-stellantis-stocks-fall-after-disappointing-earnings.html
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