Why Ford Stock Is Bouncing Back Today
A day after Ford Motor Company (NYSE: F) shares plunged due to the company warning that supply chain issues would eat into third-quarter results, investors are warming to the stock again. Shares of Ford were up as much as 3.7% on Wednesday on hopes that the company's issues, though severe, will be temporary.
For some time now the auto industry has been struggling due to a lack of available parts. There are more than 1,200 microchips in the average modern car, and roughly 30,000 parts in total. In an environment where supply chains are taxed and semiconductors in particular are struggling to keep pace with demand, vehicle production is going to take a hit.
On Tuesday, Ford quantified the toll these issues were taking. The company said it expects to end the quarter with tens of thousands of vehicles parked on lots awaiting key parts. Inflation is also eating into results. Ford said it expects supply costs in the quarter will be about $1 billion above expectations, leading the company to reduce its earnings guidance for the period.
Source Fool.com
