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Ford (F) Stock Drops 10% as Company Announces $1.7B Net Loss in Q4 Earnings Report

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by Tolu Ajiboye · 3 min read
Ford (F) Stock Drops 10% as Company Announces $1.7B Net Loss in Q4 Earnings Report
Photo: Unsplash

Ford has reported earnings for its 2019 fourth quarter. The figures reported by the automaker are much worse than both the company and Wall Street expected to see.

Detroit-based Ford Motor recently released disappointing figures from its earnings report for 2019’s fourth quarter. Its forecast for 2020 is also less than expectations from Wall Street. In response to these disappointing figures, the company’s shares plunged. As trading closed yesterday, Ford (F) stock plummeted by almost 10%, to hit $8.29. At the moment of writing, the price is $8.28.

Ford 2019 Fourth Quarter Figures

In the fourth quarter concluded recently, Ford reported that it had a net loss of $1.7 billion. The company also reported that its adjusted free cash flow fell to $498 million, crashing 67 percent. The company’s total revenue for the fourth quarter was $39.7 billion, a crash of at least 5 percent.

Ford president and chief executive officer Jim Hackett suggests in the publication that the company’s loss was mainly because of the redesign of its Ford Explorer SUV. Hackett also admitted that the company’s performance for the entire year was disappointing even for them. He said:

“Financially, the company’s 2019 performance was short of our original expectations, mostly because our operational execution – which we usually do very well – wasn’t nearly good enough. We recognize, take accountability for and have made changes because of this.”

Ford in 2020

Even the company’s announced 2020 figures are lower than Wall Street expectations. Ford is expecting 2020 full-year earnings not lower than 94 cents and not higher than $1.20 per share. Hackett is however positive that Ford will perform much better in 2020. He said:

“Our leadership team is determined to return to world-class levels of operational execution. We will do that without losing any momentum in creating a Ford Motor Co. that will thrive and generate long-term value in these fast, changing times.”

Ford vs. Tesla

While Ford’s figures for 2019’s fourth quarter disappointed both the company and Wall Street, the story with Tesla is very different. The company released impressive figures for its fourth quarter and its stock jumped within hours of the release.

Tesla is now the most valuable auto company in the U.S. and is more valuable than Ford, Fiat Chrysler and General Motors combined. Ford looks like it has a very long way to go if it is to even compete favorably with Tesla.

Ford in China

Throughout last year, Ford lost a total of $771 million in China. $207 million of that was lost specifically in the fourth quarter and there is no official forecast from the company about when the Chinese market will begin to do well.

It might also be important to think about the impact of the coronavirus outbreak on China. At the moment, it would make sense to assume that no matter what moves Ford makes, China might not be profitable for a while. Many parts of the city have been totally locked down and movement has been very limited. The CEO says the company might need “weeks to understand the implications of the outbreak.”

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