24/7 Wall St. Insights
- Most of the blame for the big hit to Ford Motor Co. (NYSE: F) stock falls on CEO Jim Farley.
- The company faces poor electric vehicle sales and poor product quality issues.
- Also: 2 Dividend Legends to Hold Forever
Ford Motor Co. (NYSE: F) stock took a huge hit, and Jim Farley, Ford’s CEO since October 2020, gets most of the blame. First, his attempt to move into electric vehicles (EVs) cost the number two U.S. car company billions in losses. Now, poor product quality has cost Ford billions of dollars in warranty costs. Farley promised almost two years ago that the warranty problem would be fixed. The company has made some progress with poor vehicle quality, but not enough. It ranked 17th out of 34 in the recent Consumer Reports annual report on brand quality.
Ford’s Most Recent Quarter in Numbers
Ford’s adjusted per-share earnings came in at $0.47, against a consensus estimate of $0.68, a massive miss. Revenue was $44.81 billion, against expectations of $44.02 billion. Most of the warranty problems are for models from 2021 and early. However, those problems linger.
Ford Chief Financial Officer John Lawler said, “We’re making real progress on quality that will benefit us down the road.” That was not enough to tame angry investors, who sold the stock down over 12% after hours after a 1% dip during the trading day.
Ford’s stock has traded little more than flat for the past two years, when the recent sell-off was considered. The S&P 500 is up 36% over the same period, and shares of rival General Motors Co. (NYSE: GM) are about 35% higher.
Over time, more than warranties have weighed on Ford’s poor stock performance. Management said in 2021 that it would invest $30 billion in EVs between 2021 and 2025. What it has for that is monthly sales of EVs in the tens of thousands. Sales of its EV flagship F-150 Lightning, the electric version of the most popular vehicle in the United States, have been terrible. Ford sold 7,902 of these in the second quarter.
Farley has not turned Ford around. If anything, he has put the company in reverse.
Performance of Select Car Companies in Recent Years
Here’s a comparison of Ford relative to other car companies in recent years.
| Company | Year-to-Date Performance | 2-Year Performance |
| Ford | -15.9% | 4.3% |
| Toyota | 14.9% | 26% |
| General Motors | 23.5% | 35.1% |
| Honda Motor | 1,3% | 30.3% |
| Tesla | -11.8% | -14.9% |
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