Ford Plummets Despite Better-than-Expected Earnings

Ford Plummets Despite Better-than-Expected Earnings

Ford Motor (NYSE: F) surpassed Wall Street’s expectations for its first quarter in spite of the worldwide semiconductor chip shortage disrupting the industry. Nevertheless, the company’s stock fell 10.4% during intraday trading on Thursday.

The automaker reported earnings of USD0.89 per share, compared to the estimated USD0.16 a share. Revenue amounted to USD33.55 Billion, surpassing analysts estimates by 7.79%.

Despite the positive results, analysts were baffled by the company’s guidance for the year.

“Let’s just put it like this: Ford’s 1Q was far ‘too good’ to extrapolate while the remainder of the year is ‘too challenged’ to extrapolate,” Morgan Stanley analyst Adam Jonas said in a note to investors.

Three different analysts revealed that Ford’s outlook for the year was confusing or puzzling.

“While Ford’s 1Q:21 results were impressive, the company somewhat confusingly … communicated its 2021 financial outlook, which we believe is creating some investor concern,” Bank of America Global Research analyst John Murphy said in a note.

According to Ford, the chip shortage would impact full-year earnings by USD2.5 Billion amounting to USD5.5 Billion – USD6.5 Billion. The company had originally stipulated a guidance of USD8 Billion – USD9 Billion.

Ford revealed that the shortage will force it to halt a Chicago factory until May 14. The factory, which first shut down April 12, is known for producing Ford Explorer and Lincoln Aviator SUVs. The company has also paused production in Flat Rock, Michigan as well as Kansas City.