What Happened?
Shares of automotive manufacturer Ford (NYSE: F) fell 3.2% in the afternoon session after the company disclosed a costly vehicle recall. The company announced it is recalling nearly 700,000 of its Bronco Sport, Escape, and Kuga SUVs due to faulty fuel injectors that could crack and leak fuel, creating a potential fire risk. Ford estimates the cost of this "field service action" will be approximately $570 million, a charge that will be reflected in its upcoming second-quarter results. This action expands on previous recalls for the same issue after fires were reported in vehicles that had already received an earlier software-based fix. The news adds to growing concerns over the company's quality control, as Ford has issued significantly more recalls than any other U.S. automaker in the first half of 2025. These repeated safety issues and their associated costs are weighing on investor sentiment, raising questions about the impact on future profitability and brand reputation.
The shares closed the day at $11.24, down 2.9% from previous close.
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What Is The Market Telling Us
Ford’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 17.2% on the news that the company reported weak second-quarter earnings. Its operating income and EPS missed by a large magnitude due to warranty issues and inflationary pressure on repair costs. Adding to the pricing pressure, the Ford Model E business recorded a $1.1 billion loss due to industry pricing pressures and wholesale declines. Profitability outlook wasn't encouraging as its full year operating income guidance missed. On the other hand, Ford blew past analysts' revenue expectations. Still, this was a bad quarter for Ford.
Ford is up 16.3% since the beginning of the year, but at $11.22 per share, it is still trading 22.9% below its 52-week high of $14.55 from July 2024. Investors who bought $1,000 worth of Ford’s shares 5 years ago would now be looking at an investment worth $1,636.
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