Scott Mill | CNBC DETROIT – Ford Motor stock is on pace for its worst day in more than 11 years after the automaker pre-released part of its third-quarter earnings report and warned investors of $1 billion in unexpected supplier costs. Ford shares were trading at around $13.10 a piece on Tuesday afternoon, down more than 12%. If the losses persist at the close, it will knock about $7 billion off the company’s market value. It would also be the stock’s worst day on a percentage basis since Jan. 28, 2011, when the automaker’s fourth-quarter earnings disappointed investors and the stock lost 13.4% to close at $16.27 a share, according to data compiled by FactSet. Ford, after markets closed Monday, said supply problems had led to parts shortages affecting about 40,000 to 45,000 vehicles, mostly high-margin trucks and SUVs that could not reach dealers. Despite the problems and additional costs, Ford reaffirmed its guidance for the year but set expectations for third-quarter adjusted earnings before interest and taxes to range from $1.4 billion to $1.7 billion. That would be significantly lower than the forecasts of some analysts, who had predicted quarterly earnings of close to $3 billion. Ford cited recent negotiations that resulted in inflation-related supplier costs that will be about $1 billion higher than originally expected. While no major Wall Street analysts downgraded the stock in light of the news, several were caught off guard by Ford’s announcement. Expectations were that supply chain problems were abating. Moreover, Ford has recently avoided such problems better than some of its competitors. Goldman Sachs analyst Mark Delaney said his firm was “surprised by the Q3 forecast given Ford’s previous progress on supply chain bottlenecks.” BofA Securities analyst John Murphy echoed those sentiments in a note to investors on Tuesday: “Ultimately, this news is somewhat surprising as broader macroeconomic news suggests that supply chains have gradually improved in recent months.” Several analysts have questioned whether this is a Ford-specific problem or additional problems for the automaker. In July, GM warned investors that supply chain issues would significantly impact second-quarter earnings, while it similarly maintained its guidance for 2022. The automaker said it had about 95,000 vehicles in its inventory that were built without certain components that were expected to be completed during the second half of the year. Ford said its unfinished vehicles are expected to be completed and shipped to dealers in the fourth quarter. The company’s stock is down more than 35% year-to-date, but is still up about 2% over the past 12 months. — CNBC’s Christopher Hayes and Michael Bloom contributed to this report.
