What happened

Shares of Goodyear Tire & Rubber (GT -2.46%), one of the world's largest tire companies, are down 13% Friday afternoon despite the company beating top- and bottom-line estimates in its third-quarter earnings release today.

So what

Despite the stock price decline today, which is partly due to the broader market sell-off as COVID-19 concerns continue to mount overseas and in the U.S., Goodyear posted a solid third quarter. While its third-quarter total unit volume was down 9% compared with the prior year, the company noted improving volume throughout the quarter, significantly better-than-expected working capital, strong net cost savings, and total liquidity of roughly $4.2 billion. Revenue checked in at $3.46 billion, which was well ahead of the $3.29 billion analysts had forecast, and adjusted earnings per share of $0.10 easily thumped analysts' estimates calling for a loss of $0.06 per share.

A stack of tires

Image source: Getty Images.

"Our results reflect increasing momentum as the global tire industry recovered more quickly than we expected during the quarter, led by the Americas," said Richard J. Kramer, the company's chairman, chief executive officer, and president, in a press release. "We are taking every opportunity to continue building our business for the long term, while generating significant cost savings and free cash flow."

Now what

Investors should probably separate Goodyear's stock price decline today from its third-quarter results. The solid results are simply a snapshot of where the company was, but the truth is that new COVID-19 cases are surging overseas, and if the U.S. is trending a few weeks behind that scenario, investors are likely pessimistic on Goodyear's outlook for the rest of the year and early 2021. Simply put, if consumers and workers are potentially sidelined due to possible increased restrictions or social distancing, fewer tires will be on the road -- and the pessimism for Goodyear, and other parts of the automotive industry, is just that straightforward at the moment.