Ford stock (NYSE:F) is in the process of revamping. Under the Ford+ banner, the business will run three distinct parts beginning next year.
The carmaker is grappling with increased costs and other supply chain challenges as it prepares to divide its heritage internal combustion engine brands, new fully electric cars (EVs), and commercial and government client sales. According to S&P Global Market Intelligence data, investors are not optimistic about the company’s ability to turn things around any time soon, driving its shares down 26.5% last month.
Ford Stock: what’s the deal with Ford?
The biggest driver of Ford stock (NYSE:F) September drop was a September 19 report in which Ford warned investors that it would absorb $1 billion in unplanned supply chain expenses in the third quarter. The business also said that due to supply chain interruptions, it would end the quarter with between 40,000 and 45,000 cars in inventory, awaiting certain critical components before they could be finished.
So, what now?
Management attempted to calm market fears by reiterating its forecast for 2022 adjusted earnings before interest and taxes (EBIT) of between $11.5 billion and $12.5 billion. However, it would have to compensate for the additional expenditures. These expenses have also risen. In its second-quarter report, Ford raised its projection for inflation-related spending to $3 billion. That was $1 billion more than it had anticipated only a few months ago, and it has already increased its predicted expenses by another $1 billion.
Following the third-quarter release, investors learned how Ford intends to offset rising spending. The company has raised the price of its electrified F-150 Lightning pickup vehicle for the second time in two months. Ford increased the starting price of the Lightning Pro by more than 10% to $51,974. This is also 30% more than Ford’s initial MSRP of less than $40,000 in May 2021. The firm said that the price increase was necessary due to “ongoing supply chain bottlenecks, increased material prices, and other market conditions.” It also said that it would continue to examine prices, hinting that other modifications might be made before the 2023 model year.
However, some analysts believe it isn’t enough to turn Ford stock (NYSE:F) around. According to CNBC, UBS has lowered Ford stock (NYSE:F) to a sell rating. The business thinks the car industry is oversupplied after many years of good supply-demand balance, which provided manufacturers with excellent pricing power. Investors seem to believe Ford’s journey into the EV industry will be considerably more difficult.
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Author Okoro Chinedu 
