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CEO Jim Farley said this month that costs and supply-chain issues left Ford with a profit about $2 billion lower than it could have been.
Karen Bleier/AFP via Getty Images
Stock in
Ford Motor
has had a strong start to 2023, but the shares have slid since the company reported fourth quarter earnings, when CEO Jim Farley lamented profits his company left on the table in 2022.
Friday morning, Ford (ticker: F) stock was down again, dropping almost 6% in early trading. That is a lot, but the slide is a result of a successful move the company made years ago, rather than something to worry about. What is more, identifying any drop at all depends on where investors look.
Ford declared a special dividend of 65 cents a share related to its unloading of stock in the EV startup Rivian when it reported its fourth-quarter earnings on Feb. 2. Ford also pays a regular 15-cent quarterly dividend.
Ford stock went ex-dividend on Friday. That means that means only holders of the stock on Thursday qualify for the 65 cent and 15 cent dividends. The market has now adjusted for that fact by taking 75 cents off the price of Ford stock Friday morning.
There is no reason for the stock drop to exactly reflect the size of the dividends. A lot of other stuff is going on that affects Ford’s share price.
Some financial websites have Ford stock down 5.7% at $12.72 a share. Barron’s site shows it up 3 cents at $12.72 a share. Some stock-tracking systems take special dividends off the price of shares to reflect what is going on beyond the special item.
Spinoffs of companies are treated similarly. Coming into Friday trading,
General Electric
(GE) stock was up 24% year to date at $80.79. Shares closed 2022 out at almost $85. The strange math is the result of the fact that
GE HealthCare Technologies
(GEHC) was spun out on Jan. 3. That was worth $19.46 a share on Dec. 30.
In terms of financial reality, Ford stock is, essentially, unchanged on a sleepy day, so far, for the market. The
S&P 500
and
Dow Jones Industrial Average
are down 0.2% and 0.1%, respectively.
Some things could still move the stock. The Wall Street Journal reported Thursday afternoon that Farley held a town hall meeting with employees, laying out his desire for simpler goals and performance metrics for employees.
That report follows on Farley’s lament on the company’s fourth-quarter earnings call that his company left billions in profit on the table last year.
“Financial performance last year fell short of our potential and while we generated record cash flow, we left about $2 billion of profit on the table due to cost and especially continued supply chain issues,” said Farley on a conference call to discuss the earnings. “These are the simple facts and to say I’m frustrated is an understatement because the year could have been so much more for us at Ford.”
Another thing that will move car stocks on Friday is results from ride-haling company
Lyft
(LYFT), which reported a terrible quarter, with a per-share loss of 76 cents. Analysts were looking for a 13-cent profit.
Lyft
shares were down 35% in early trading.
Lyft
‘s and
Uber Technologies
‘ (UBER) fleets represent a lot of commercial demand for Ford,
General Motors
(GM), and even
Tesla
(TSLA). It’s never good for a stock when customers struggle.
GM shares were off 1.1%.
Tesla
shares fell 4.9% after rising 3% Thursday when the
Nasdaq Composite
lost about 1%.
The special dividend comes mainly as a result of Ford’s successful investment in EV startup
Rivian Automotive
(RIVN), starting in 2019. Ford once held almost 100 million share of Rivian, but a Thursday filing showed that Ford had a roughly 10 million shares worth about $200 million left as of Dec. 31.
The decline in the stake isn’t a surprise. On the earnings conference call, Ford said it was done selling most of its Rivian shares.
Coming into Friday trading, Ford stock was up about 16% so far this year, compared with 23% ahead of the release of fourth-quarter earnings on Feb. 2. The stock slid almost 8% after the results and is down an additional 5% since then, including Friday’s move.
But excluding the dividend. Ford stock is flat since the earnings disappointment and remains up about 15% year to date.
Write to Al Root at [email protected]
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