On March 28, 2024, the Ford Bronco was displayed at the New York International Auto Show.
Danielle DeVries | CNBC
Detroit- Ford Major U.S. auto stocks led losses this week as results disappointed and investors were skeptical about future performance.
Ford's shares fell more than 17% in early trading on Thursday, the worst drop since 2009, after the company failed to meet Wall Street's profit expectations due to warranty issues, a recurring problem for the company.
shares General Motors and Strantis Share prices also fell significantly after these companies reported results this week. shares TeslaThe company, which reports results on Tuesday afternoon, posted modest gains on Thursday after posting its biggest one-day drop since 2020 on Wednesday.
The traditional “Detroit” automakers — Ford, General Motors and Stellantis — are being punished partly because of industry-wide uncertainty, but more for individual issues.
General Motors fell about 7% this week after its second-quarter performance topped Wall Street expectations and raised its guidance for the year. Wall Street was impressed by the quarter, but investors were hesitant about a pullback in growth businesses, less momentum in the second half and concerns that the automaker's profitability had peaked.
Stellantis reported first-half results that were “disappointing,” as CEO Carlos Tavares described them Thursday morning, largely due to ongoing issues at its North American operations.
The company's New York Stock Exchange-listed shares are down nearly 10%, near a 52-week low of $17.57 a share set in August.
Ford, General Motors, Stellantis and Tesla stock performance in this week's earnings reports.
Despite ongoing issues, Stellantis reiterated 2024 guidance, which includes double-digit adjusted operating margin, positive industrial free cash flow and at least €7.7 billion available to investors in the form of dividends and buybacks return on capital.
“This is a very tough industry, a very tough time, and everyone has to fight for performance,” Tavares said. “We have to work hard to achieve a performance like this.”
Ford executives made similar remarks when they reiterated guidance for 2024, although the guidance was 21 cents below the adjusted earnings per share estimate. The automaker reported an $800 million increase in accident warranty costs compared with the previous quarter.
Ford's 2024 guidance includes adjusted earnings before interest and taxes (EBIT) of between $10 billion and $12 billion.
Several Wall Street analysts have expressed disappointment at Ford's resurgent warranty costs, but many remain optimistic about the company's underlying business operations.
Most notably, Morgan Stanley's Adam Jonas still ranks Ford as a “top pick” for the company, while downgrading GM to equal weight from overweight — despite a solid quarter for the Detroit automaker.
“The results are impressive considering the huge losses in EV, Cruise and China,” Jonas said in a GM investor note on Tuesday. “History shows that good times don't last.”
Jonas said the company sees greater potential upside for Ford, “although our belief is being tested by ongoing challenges … many of which we believe are within management's control.”
Shares of Tesla, the U.S. electric vehicle leader, closed down 12% on Wednesday after the electric car maker reported weaker-than-expected quarterly earnings and another decline in auto revenue.
— CNBC Michael Bloom and Lola Kolodny contributed to this report.