Why Shares Of Ford Are Down By 9% Today?
Ford Video 29.04.21.
Chip Shortage Hurts Ford’s Production Plans
Shares of Ford found themselves under pressure after the company reported its quarterly results. Ford reported revenues of $36.2 billion and earnings of $0.81 per share, beating analyst estimates on both earnings and revenue.
However, the stock dived as the company stated that it would likely lose 50% of planned second-quarter production due to chip shortage. The chip shortage, which was already a major headache for the auto industry, was exacerbated by a fire at a key chip supplier.
At this point, Ford believes that the “full recovery of the auto chip supply will stretch into fourth quarter of this year and possibly even into 2022”. As a result, the company expects to lose 10% of planned second-half 2021 production.
In total, Ford will lose about 1.1 million units of production in 2021, so it decreased its adjusted EBIT guidance to $5.5 billion – $6.5 billion.
What’s Next For Ford?
While chip shortage is not news for anyone interested in the auto industry, the 50% hit to the second-quarter production clearly took investors by surprise. The recent Tesla report and the subsequent earnings call highlighted problems with chips, but it was hard to expect problems of this magnitude at Ford.
Production problems have spoiled the impression from a solid first quarter, and now the market will focus on forecasts for supply of semiconductors rather than Ford’s first-quarter financial results.
At this point, the negative sentiment is prevailing, and Ford’s established peers like General Motors and newcomers like NIO are all under significant pressure. Ford had a successful start of the year, and the company’s shares were up by more than 40% before the release of the earnings report. In this light, there is plenty of room for a pullback. At the same time, Ford was performing well before chip supply problems hit the company, so it will have a good chance to attract value hunters in case the stock continues to move lower.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
