The Ford Bronco is on display at the New York International Auto Show on March 28, 2024.
Danielle DeVries | CNBC
Detroit — Ford Motor Company The major U.S. automaker is leading a decline in its shares this week amid disappointing results and investor skepticism about future performance.
Ford shares fell more than 17% in early trading Thursday — on track for their worst drop since 2009 — after the company failed to meet Wall Street's earnings expectations due to warranty problems, a recurring issue with the company.
Shares of General Motors And Stellantis Shares of companies also fell significantly after companies reported their results this week. TeslaTechnology stocks, which reported earnings Tuesday afternoon, rose slightly on Thursday after their biggest daily decline since 2020 on Wednesday.
Detroit’s traditional automakers — Ford, General Motors, and Stellantis — have been punished partly by the industry-wide uncertainty, but more in response to individual issues.
General Motors, whose shares fell about 7% this week, beat Wall Street’s second-quarter expectations and raised its outlook for the year. Wall Street liked the quarter, but investors were hesitant to take on the slowdown in business growth, the slump in the second half of the year and concerns that the automaker’s earnings power may have peaked.
Stellantis reported “disappointing” first-half results, as CEO Carlos Tavares described them Thursday morning, largely due to ongoing issues at its North American operations.
The company's shares, listed on the New York Stock Exchange, fell about 10%, trading near their 52-week low of $17.57 a share, hit in August.
Ford, GM, Stellantis and Tesla shares perform amid earnings reports this week.
Despite the ongoing issues, Stellantis reaffirmed its 2024 guidance which includes a double-digit adjusted operating income margin, positive industrial free cash flow and at least €7.7 billion in capital return to investors in the form of dividends and buybacks.
“It's a very tough industry, a very tough period, and everyone has to struggle to perform. And we will have to work hard to achieve that performance,” Tavares said.
Ford executives made similar comments when reaffirming its 2024 guidance, though it came in about 21 cents below adjusted earnings per share expectations. The automaker reported an additional $800 million in unexpected warranty costs compared to the previous quarter.
Ford's 2024 guidance includes adjusted earnings before interest and taxes, or EBIT, of $10 billion to $12 billion.
Many Wall Street analysts have expressed frustration over Ford's rising warranty costs, but many remain optimistic about the company's underlying business operations.
Most notably, Morgan Stanley’s Adam Jonas kept Ford as his “top pick” for the company, while downgrading GM from overweight to equal weight — despite the Detroit automaker’s stellar quarter.
“Impressive results given the big losses in EVs, cruise and China,” Jonas said in a note to GM investors on Tuesday. “History suggests the good times don’t last.”
Jonas said the company sees further upside potential at Ford, “although our conviction is being tested by ongoing challenges… many of which we believe are within management’s control.”
Shares of Tesla Inc., the leading U.S. electric car maker, closed down 12% on Wednesday after the electric car maker reported weaker-than-expected quarterly earnings and another decline in automotive revenue.
— CNBC's Michael Bloom and Laura Kolodny contributed to this report.
