Ford Stock Plunges as Earnings Outlook Sours Despite Strong Q4 Results

Ford Motor Company (NYSE: F) shares took a nosedive on Monday, falling 6% in extended trading after the automaker reported fourth-quarter adjusted diluted earnings per share of $0.39, up 34.5% year over year, and beating the $0.33 LSEG consensus. However, the stock fell 4.5% in Feb. 5 after-hours trading, which we attribute to 2025 guidance well below consensus. We maintain our fair value estimate of $19 but will reassess all inputs once we roll our model forward for the 10-K.

Ford's Q4 results were indeed impressive, with the company declaring a supplemental dividend of $0.15 per share payable ($596.1 million) on March 3 to shareholders on record at Feb. 18. However, the company's guidance for 2025 was well below market expectations, with adjusted pretax income projected to range between $7 billion and $8.5 billion, compared to the $10.2 billion reported in 2024. This decline in earnings was primarily attributed to headwinds related to market factors, including increased competition and pricing pressure in the electric vehicle (EV) market, as well as the potential impact of proposed tariffs on Canada and Mexico.



Ford's electric vehicle division, Ford Model e, reported a 2024 EBIT loss of $5.1 billion and projected a 2025 EBIT loss of $5.0 billion to $5.5 billion. The company attributed this to increased competition and pricing pressure in the EV market, as well as continued investment in future products. Additionally, CEO Jim Farley mentioned that proposed tariffs on Canada and Mexico could have a significant impact on the industry, wiping out "billions of dollars of industry profits" and affecting US jobs.

As an investor, it's essential to consider the potential impact of these factors on Ford's competitive position in the market. The proposed tariffs could lead to a substantial decrease in industry profits, which could affect Ford's ability to compete with other automakers. Additionally, the losses in the EV division could make Ford's vehicles less affordable and attractive to consumers compared to competitors that may not be as affected by the tariffs.

In conclusion, Ford's strong Q4 results were overshadowed by the company's downbeat outlook for 2025. The projected decline in earnings, driven by headwinds related to market factors and the potential impact of proposed tariffs, has raised concerns about the company's competitive position in the market. As an investor, it's crucial to monitor the situation closely and consider the potential impact of these factors on Ford's stock price and overall financial performance.