Ford shares, on pace for worst day since 2009, lead autos rout after disappointing earnings

DETROIT – Ford Motor is leading a decline in major U.S. automotive stocks this week amid disappointing results and investor skepticism around future performance.

Shares of Ford were off by more than 17% in early trading Thursday – on pace for their worst decline since 2009 – after missing Wall Street's bottom-line earnings expectations due to warranty problems, a reoccurring issue with the company.

Shares of General Motors and Stellantis were notably off as well after reporting their results this week. Shares of Tesla, which reported results Tuesday afternoon, were up slightly Thursday after their largest daily decline since 2020 on Wednesday.

The traditional "Detroit" automakers — Ford, GM and Stellantis — were punished partially due to industrywide uncertainty, but more so in response to individual issues.

GM, down roughly 7% this week, outperformed Wall Street's expectations for the second quarter and increased its guidance for the year. Wall Street was impressed with the quarter, but investors balked at pullbacks in growth businesses, waning upside during the second half of the year, and fear that the automaker's earnings power has peaked.

Stellantis reported "disappointing" first half results, as described Thursday morning by CEO Carlos Tavares, largely due to ongoing issues in its North American operations.

NYSE-listed shares of the company were down morning by almost 10%, trading near a 52-week low set in August of $17.57 per share.

Stock performance of Ford, GM, Stellantis and Tesla amid earnings reports this week.

Despite the ongoing problems, Stellantis reconfirmed its 2024 guidance that includes a double-digit adjusted operating income margin, positive industrial free cash flow and at least 7.7 billion euros in capital return to investors in the forms of dividends and buybacks.

"This is a very tough industry, a very tough period and everybody has to fight for performance," Tavares said. "We will have to work hard to deliver that performance."

Ford executives made similar comments when reconfirming its 2024 guidance despite coming in a whopping 21 cents below adjusted earnings per share expectations. The automaker reported an additional $800 million in unexpected warranty costs compared with the prior quarter.

Ford's 2024 guidance includes adjusted earnings before interest and taxes, or EBIT, of between $10 billion and $12 billion.

Several Wall Street analysts voiced frustration over Ford's re-emerging warranty costs, but many were still optimistic about the company's underlying business operations.

Most notably, Morgan Stanley's Adam Jonas kept Ford as the firm's "top pick," while downgrading GM from overweight to equal weight — despite the Detroit automaker's standout quarter.

"Impressive results considering large losses in EVs, Cruise and China. History suggests the good times won't last," Jonas said Tuesday in a GM investor note.

Jonas said the firm sees more potential upside in Ford, "albeit our conviction is being tested by continued challenges… many of which we believe are within management's control."

Shares of U.S. EV leader Tesla closed down 12% on Wednesday after the electric vehicle maker reported weaker-than-expected quarterly earnings and another drop in automotive revenue.

– CNBC's Michael Bloom and Lora Kolodny contributed to this report.