Ford Motor Co.’s stock fell more than 12% on Tuesday, the highest in a straight day in more than a decade, after the carmaker reported inflation-related expenses would be $1 billion higher than projected in the current quarter and that parts shortages had slowed deliveries.
The stock finished at $13.09, representing the greatest percentage fall for the session since January 2011.
Ford’s preliminary third-quarter results, released late Monday, drove rivals General Motors Co (GM.N) shares down 5.6%, as experts predicted that automakers would take longer to recover from chip shortages.
“It appears that across the industry, chip and components shortages may be improving at a slower pace than anticipated,” Deutsche Bank analyst Emmanuel Rosner said.
Ford stated in July that it expects commodity costs to grow by $4 billion this year. The Greater Detroit Manufacturers Association’s warning comes less than a week after FedEx Corp (FDX.N) lowered its financial projection due to weakening worldwide demand.
Ford’s inflation problems and FedEx’s sluggish demand illustrate the Federal Reserve’s predicament ahead of its policy-making meeting on Wednesday.
In its fight against decades of high inflation, the Fed is largely expected to raise rates by 75 basis points. Its aggressive monetary policy campaign has hammered the US stock market in recent weeks, with investors concerned that the Fed’s actions may stymie the economy.
Ford also predicted that it would have 40,000 to 45,000 cars in inventory that were missing parts. It has confirmed its 2022 adjusted earnings before interest and taxes prediction of $11.5 billion to $12.5 billion, which it will publish on October 26.
According to Deutsche Bank’s Rosner, it is unclear whether chip and part supply will normalise by the end of the year. Ford’s stock is down 37% in 2022, far outpacing the 19% drop in the S&P 500’s (.SPX).
