Ford Falls Apart Under CEO Farley

By Douglas A. McIntyre Updated Jul 26, 10:39AM EDT · Published Jul 25, 6:40AM EDT

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Ford Falls Apart Under CEO Farley — © Toa55 / iStock via Getty Images

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Most of the blame for the big hit to Ford Motor Co. (NYSE: F | F Price Prediction) stock falls on CEO Jim Farley.
The company faces poor electric vehicle sales and poor product quality issues.
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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%

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.