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Ford Stock Drops More Than 4% As Supply Costs to Jump by $1 Billion

Ford stock (NYSE:F) fell more than 4% in Mondays extended session.

The company announced that inflation and component shortages would leave it with more unfinished cars than projected, reminding Wall Street that automakers supply-chain woes are far from resolved.

What Happened to Ford Stock

Ford (NYSE:F) said it expects to have 40,000 to 45,000 cars in inventory after the third quarter, lacking critical items that are currently in limited supply.

The automaker also said that, due to inflation, payments to suppliers would be around $1 billion more than projected for the quarter, based on recent talks. However, the corporation confirmed its expectation for the year.

According to CFRA analyst Garrett Nelson, Fords warning proves that auto parts shortages and supply-chain difficulties are still occurring.

Many investors had begun to feel that these challenges were in the rearview mirror, with inventories beginning to rise from the record lows of the previous year or two, according to Nelson.

According to Ford (NYSE:F), the unfinished cars include high-demand, high-margin types of popular trucks and SUVs. As a result, specific shipments and revenue will be shifted to the fourth quarter.

Ironically, Ford (NYSE:F) may have become a victim of its success, Nelson said, noting that the companys recent U.S. sales growth has exceeded rivals by a significant margin. Its third-quarter output apparently failed to keep pace with demand.

Despite the shortages and increased payments to suppliers, Ford reaffirmed its forecast for full-year 2022 adjusted profits before interest and taxes of between $11.5 billion and $12.5 billion. Ford (NYSE:F) forecasted third-quarter adjusted EBIT of $1.4 billion to $1.7 billion.

Ford stock (NYSE:F) finished the regular trading day up 1.4%. The corporation has begun restructuring to pivot to electric cars, and layoffs were announced last month as part of the new structure.

Ford is scheduled to disclose third-quarter financial results on Oct. 26, when it intends to give additional information about full-year performance projections.

FactSet analysts predict the automaker will post adjusted profits of 51 cents per share, matching the third-quarter 2021 adjusted EPS, on sales of $38.8 billion. The quarterly revenue would be up from $35.7 billion the previous year.

Ford stock (NYSE:F) fell 4.4% after hours, bringing its year-to-date loss to 28%, compared to 18% for the S&P 500 index SPX, +0.69%.

The announcement comes only a week after FedEx Corp. roiled markets and fueled worries of an economic downturn by retracting its fiscal year projection and warning that the companys performance would likely deteriorate.

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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Gazette Source journalist was involved in the writing and production of this article.