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Ford Stock Drops 5.14% After-Hours on Profit Warning and Financial Challenges

Ford Motor's stock took a hit on February 5th after the company issued a warning that its profit could decline by $2 billion or more this year. The automaker cited an anticipated drop in vehicle prices and the high costs associated with launching new models like the Lincoln Navigator and Ford Expedition SUV as key factors contributing to the expected profit decline. Sherry House, Ford's incoming CFO, highlighted that industrywide vehicle prices are projected to fall by about 2%, which, combined with the new model launches, could lead to a "breakeven" first quarter. Additionally, Ford is grappling with potential policy changes under President Donald Trump, including steep new tariffs and reduced federal support for electric vehicles (EVs), which could further impact the company's financial performance.

The challenges facing Ford are compounded by its ongoing struggle to reduce high warranty costs, which CEO Jim Farley has identified as a significant disadvantage compared to competitors. The company is targeting $1 billion in cost cuts this year to address these issues. Despite these efforts, Ford's EV segment continues to be a financial drain, with a record $5.1 billion loss last year and a projected increase to as much as $5.5 billion this year. Farley is working to overhaul Ford's EV strategy, aiming to produce more affordable models with longer ranges, but these are not expected to hit the market until 2027.

Ford's shares closed at $10.01, down 1.48% from the previous day's close of $10.16, and further declined by 5.14% in after-hours trading to $9.495.