Shares of Ford Motor Company (NYSE:F) were trading sharply lower on Thursday morning, after the company cut its guidance for 2021 and said that an ongoing shortage of semiconductors could force it to cancel half of its planned second-quarter production.
As of 10 a.m. EDT, Ford's shares were down about 9.1% from Wednesday's closing price.
Ford's first-quarter earnings were actually quite good. The Blue Oval trounced Wall Street's estimates with $3.3 billion in net income and an adjusted operating margin of 13.3%. For a mature automaker, those are very strong results, especially in light of the ongoing chip shortage.
But it's that chip shortage -- or specifically, Ford's cautious guidance around it -- that was putting pressure on Ford's shares on Thursday morning. Chief Financial Officer John Lawler said that Ford currently expects to lose about half of its planned second-quarter production, and about 10% of its planned production in the second half of 2021.
Put another way, Ford expects to fall about 1.1 million vehicles, or somewhere in the neighborhood of 20%, short of its full-year production plans because of the chip shortage. As a result, the company cut its full-year adjusted operating profit forecast to between $5.5 billion and $6.5 billion, down from the $8 billion to $9 billion it expected at the beginning of the year. That's why the stock is down today.
It's important to remember that there was also some very good news in Ford's earnings report. The company generated excellent margins in the first quarter on strong sales of trucks, SUVs, and commercial vehicles -- and it posted big improvements in Europe and China, two regions that have been undergoing restructuring.
I think the takeaway is that once we get past this global chip shortage, Ford's bottom line should be looking quite good. For auto investors willing to wade in with a longer-term mindset, there could be a nice opportunity here.