Ford Motor guided low late Monday after beating earnings and revenue estimates for the third quarter. Shares of Ford stock tumbled below a key level on Tuesday.
The company's new guidance implies a weaker outlook for the current fourth quarter, analysts said.
"We maintain a hold on (Ford) shares, as we expect Ford and other domestic automakers to continue struggling with an inventory glut, leading to rising incentives and other measures which should eat into margins," CFRA analyst Garrett Nelson said in a note to clients. He cut the firm's 12-month price target on Ford stock by $1 to $11 per share.
Ford's report followed blowout Q3 results from General Motors last week. GM stock eased into buy range on Tuesday.
Electric Cars Hurt Ford Earnings
For Q3, Ford delivered earnings of 49 cents a share, a 25.6% increase vs. a year ago and ahead of estimates for 46 cents. Revenue grew 5.5% to $46.2 billion, beating views for $45.126 billion. That marked the first earnings gain in four quarters. In an earnings release, Ford tied Q3 results to lower overall costs, higher volumes and favorable mix, offset by pricing pressure in electric vehicles.
By segment, the Ford Pro commercial business and Ford Blue traditional vehicle business generated positive Q3 earnings before interest and taxes. The Ford Model e EV business lost $1.2 billion last quarter amid a price war despite improving costs.
Late Monday, Ford guided 2024 adjusted EBIT of $10 billion, at the low end of its prior guidance for $10 billion-$12 billion. It would also be below adjusted EBIT of $10.4 billion in 2023. Ford said Monday that it continues to expect adjusted free cash flow of $7.5 billion-$8.5 billion for the full year.
Going into the Q3 report, Wall Street was expecting full-year EPS of $1.87, a 7% decrease from 2023.
Ford Stock
Shares of Ford Motor sank more than 8% in big volume on the stock market today. Ford stock fell back below its 50-day moving average on Tuesday. It had recovered that key support level heading into Monday's Q3 report though it remained below the 200-day average.
In late July, Ford stock plunged below the 200-day line after a worse-than-expected Q2 earnings report. It has remained stuck below that long-term support level ever since.
GM stock fell on Tuesday, back in range from a 49.86 buy point. Last Tuesday, General Motors raised 2024 guidance after crushing earnings estimates for its third quarter.
Tesla fell on Tuesday while its Chinese archrival BYD edged higher. Tesla stock surged past a buy point last week on earnings. BYD is due to report Q3 results on Wednesday.
Among other China EV stocks, Nio lost ground after soaring nearly 11% on Monday. Macquarie analysts upgraded Nio stock to outperform from neutral. They cited order trends for the cheap new Onvo L60 electric SUV.
Ford Grew Q3 U.S. Auto Sales
Ford previously reported selling 504,039 new vehicles in the U.S. market in the third quarter. Ford's Q3 U.S. sales rose almost 1% in terms of vehicle sold vs. a year ago, defying an overall 2% industry decline. Demand for Ford trucks, electric vehicles and hybrid vehicles offset weak SUV and car sales.
Overall industry conditions remain challenging, raising fears about peak auto pricing and profits.
Further, investors continue to worry about investments in electric cars, which are money-losers for most automakers. Ford on Monday said it expects a full-year loss of "about $5 billion" for its emerging EV business, vs. prior expectations for a loss of $5 billion-$5.5 billion.
Year to date, Ford stock has now fallen almost 15%, though it has rebounded from early August lows.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
