The shares of Ford Motor Co (NYSE: F) hogged the limelight Tuesday after the company cautioned investors that it anticipates spending an additional $1 billion during the September quarter to manage the distribution chain and inflation issues. The stock closed at $13.09, down $12.32% or $1.84 from its previous close. The negative sentiment created by Ford’s announcement pushed down the Dow Jones by 313 points to 30,706. The tech-heavy Nasdaq fell by 109 points to 11,425.
The Dearborn, Michigan-based automobile maker stated that the company’s supply chain issues have led to shortages of spare parts, and this is affecting about 40,000 to 45,000 vehicles, mainly SUVs and highly profitable trucks, that are yet to be delivered to dealers.
However, Ford anticipates completing the work and delivering the vehicles to dealers by 4Q 2022. Notably, the company still anticipates FY 2022 adjusted EBIT (earnings before interest and taxes) to be in the range of $11.50 billion to $12.50 billion.
Ford has also pointed out that the rising inflationary pressure will fuel supplier costs by about $1 billion more than initially anticipated. Taking such expenses into consideration, the company expects 3Q 2022 adjusted EBIT to be between $1.40 billion and $1.70 billion.
Ford further stated that its management would provide better insight about forecasts for FY 2022 performance when it posts 3Q 2022 results on October 26th. Automakers have been fighting logistics issues since the COVID-19 pandemic pushed manufacturing to a halt at the start of 2020. Demand remained robust in spite of continuing problems with the availability of spare parts, in particular, integrated chips.
General Motors, which is Ford’s biggest competitor, has already pointed out similar problems a few months before. In particular, on July 1st, GM cautioned investors that logistics issues would affect its second-quarter earnings and that it had roughly 95,000 vehicles in its inventory that were partially built due to a lack of certain critical components. Interestingly, GM also reaffirmed its annual outlook and stated that it anticipates that completion and delivery of the aforesaid vehicles will happen before the end of this year.
The negative news is anticipated to keep Ford stock sluggish in the short term.
The historical price chart reveals that the stock of Ford is decreasing after facing resistance at 15.50. The next support is predicted only near 12. Furthermore, the stock is trading below its 50-day moving average while the ultimate oscillator is descending towards the bearish zone. Consequently, we predict the stock price of Ford to continue in a downtrend in the near term.
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