When Ford (F 2.12%) delivered its first-quarter numbers after the bell Wednesday, it reported a $3.1 billion net loss for the period. Most of that was due to the plunging value of its investment in EV start-up Rivian Automotive (RIVN -0.57%). But Ford stock still took a hit in Thursday morning trading. As of 12:06 p.m. ET, Ford shares were down 3.7% after having dropped as much as 6% earlier in the session.
The market's negative reaction to the Q1 report likely stemmed from issues beyond the performance of its Rivian stake. The state of that investment will need to be reported as gains and losses on paper for as long as Ford holds it. But on the earnings conference call, CEO Jim Farley noted several items more connected to the company's core business that could be concerning to investors.
Farley said supply chain challenges continue to impact the more profitable contributors to the business. He also noted that "we continue to be hampered by recalls and customer satisfaction actions," but said the company was going to aggressively address those issues.
Investors who initially reacted to Wednesday's news by selling the stock may rethink that decision after they dig further into the details. Ford management did not change its guidance for 2022's adjusted earnings before interest and taxes (EBIT) in the range of $11.5 billion to $12.5 billion. That forecast represents an increase of 15% to 25% compared to 2021 -- and it factors in some of the operational challenges the company is facing.
Ford says it expects commodity-related headwinds to cost it $4 billion for the year, though it hopes to offset some of those higher expenses by adjusting its own product pricing and mix. The company is also focusing on its EV lineup. It started production of the much anticipated F-150 Lightning this week, and began shipping E-Transit vans in February. It expects to have produced 600,000 of those EVs by late 2023.
Thursday's share price drop seems to indicate that some investors are feeling cautious, and want to see more of how the company executes its transition to electric vehicles before buying in.