Ford shares tumble 11% after massive earnings miss

DETROIT — Ford Motor came in short of Wall Street's second-quarter earnings expectations while beating on revenue, due to warranty costs that have plagued the automaker for several years now.

The automaker increased its full-year target for free cash flow but maintained its 2024 earnings guidance, disappointing some investors who had hoped for a hike. Ford's guidance for the year includes adjusted earnings before interest and taxes, or EBIT, of between $10 billion and $12 billion.

Shares of the automaker were down about 11% after markets closed. The stock closed Wednesday at $13.67 per share.

Here is how the company did, compared to estimates from analysts polled by LSEG:

The Detroit automaker said its profitability was affected by increases in its warranty reserves used to pay for vehicle issues. The costs are related to vehicles for the 2021 model year or older, Ford Chief Financial Officer John Lawler said during a media briefing.

Ford said recent initiatives to improve quality and vehicle launches are paying off and are expected to help bring down future warranty costs.

"We're making real progress in raising quality, lowering costs and reducing complexity across our entire enterprise," Lawler said during a media briefing. "We're making real progress on quality that will benefit us down the road."

Lawler declined to disclose Ford's total warranty cost for the second quarter but said it was $800 million more than the previous quarter.

Net income for the second quarter was $1.83 billion, or 46 cents per share, compared to $1.92 billion, or 47 cents per share, a year earlier. Adjusted EBIT declined 27% year over year to $2.76 billion, or 47 cents per share, compared to $3.79 billion, or 72 cents per share, during the second