What Happened:
Shares of automotive manufacturer Ford (NYSE:F) fell 17.2% in the morning session after 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 pricing pressure, 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.
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What is the market telling us:
Ford's shares are quite volatile and over the last year have had 5 moves greater than 5%. But moves this big are very rare even for Ford and that is indicating to us that this news had a significant impact on the market's perception of the business.
Ford is down 8% since the beginning of the year, and at $11.19 per share it is trading 23.1% 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 $1,171.
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