Ford Motor raised full-year guidance late Thursday after posting a surprise earnings gain for the second quarter on strong truck demand and pricing. But Ford stock tumbled below a key level Friday.
Despite the beat-and-raise report, the midpoint of Ford's new 2023 guidance "still calls for a sizable downshift" in the second half of the year vs. the first half, RBC Capital Markets analyst Tom Narayan said in a note to clients Thursday.
Narayan added that the implied downshift, along with Ford's withdrawal of an EV production target, "likely will raise peak earnings fears."
In Q2, traditional gas-powered vehicles continued to underpin Ford's profits. Its commercial Ford Pro business saw strong growth in the quarter. Both revenue and losses swelled in the emerging business of electric vehicles, the Ford earnings release on Thursday showed.
The automaker pushed out or walked back certain EV targets, saying the pace of adoption of battery-powered vehicles will be a little slower than expected. Ford CEO Jim Farley cast the slowdown as a benefit to early movers like his company.
Ford Earnings
Estimates: Analysts, on average, expected Ford earnings to decline 20% to 54 cents per share, according to FactSet. Revenue was seen rising 7%, year over year, to $43.168 billion.
Results: Ford earnings rose 6%, year over year, to 72 cents. Revenue rose 12% to $45 billion.
Ford Blue, the company's traditional gas-fueled business, grew revenue 5% and earned $2.31 billion in Q2. Ford Pro, the commercial business, saw revenue jump 22% and earned $2.39 billion.
Ford Model-e, the emerging EV business, saw revenue vault 39%, year over year. But EV losses widened to $1.08 billion in Q2 from $722 million in Q1. Ford expects to lose $4.5 billion on electric vehicles this year vs. around $3 billion in 2022.
Further, Ford now expects to build EVs at a rate of 600,000 per year during 2024. It previously expected to reach that target by the end of 2023. The auto giant now says it doesn't know when it will reach more than 2 million EVs per year, which it previously targeted for the end of 2026.
Outlook: For 2023, Ford on Thursday raised its adjusted EBIT guidance to $11 billion-$12 billion, from $9 billion-$11 billion. It now expects full-year adjusted free cash flow of $6.5 billion-$7 billion, up from about $6 billion.
Prior to Q2 results, Wall Street saw Ford earnings for the full year falling 2% to $1.84 per share, FactSet showed. Analysts now see 2023 EPS rising 5% to $1.98.
Ford Stock
In stock market trading Friday, Ford stock slumped 3.4% to 13.26, undercutting the 50-day moving average. F stock had gained 0.4% Thursday, after rebounding from the 50-day line Wednesday.
Ford stock eyes a 15.42 buy point from a cup-with-handle base that formed over many months, the IBD MarketSmith chart shows.
Market Rally Powers Higher; Apple, Tesla Lead 10 Stocks To Watch
EV Transition
On Tuesday, rival General Motors also beat estimates and hiked its outlook.
GM's EV strategy came under scrutiny on its investor call Tuesday and Ford is likely to be face similar grilling, Morgan Stanley analyst Adam Jonas said in a Wednesday note to clients. GM stock fell 1.3% for the week.
Ford had cut EV prices in Q2 to stimulate sales, amid a price war started by Tesla.
For Q2, Ford has already disclosed robust new vehicle sales in the U.S. market. But electric vehicles, or EVs, made up a small fraction of the total, amid a plant retooling that curbed inventories.
Established automakers have seen their rollout of new EVs hampered by battery and other supply issues. Meanwhile, a licensing deal between Ford and Chinese battery giant CATL is under legislative scrutiny.
Amid fierce EV competition, Ford recently cut Mach-E prices, and then slashed Lightning prices citing lower battery costs. The upcoming Silverado electric truck will beat Ford's Lightning on range, GM says.
Established automakers are betting that the risky and costly EV transition will eventually pay off.
Year to date, Ford stock is up 14% vs. a 116.6% jump for Tesla shares.
Other EV News
Late Wednesday, QuantumScape announced Q2 financial results. In an accompanying letter to shareholders, the EV battery startup said: "We have shipped high cathode-loading unit cells to multiple automotive partners, in line with our development roadmap." It described this as a "significant step toward delivering a commercial product."
QuantumScape stock surged 14.2% to 10.70 Thursday, paring gains. Ford has previously partnered with QuantumScape rival Solid Power for solid-state batteries.
On Wednesday, Volkswagen said it will jointly develop electric cars with XPeng Motors and invest $700 million in the Chinese EV startup for a 5% stake. XPeng stock rocketed 26% Wednesday and climbed 3.9% Thursday.
Seven global automakers, including GM, also announced an EV charging network, challenging Tesla.
