Famed economist and vocal Bitcoin (CRYPTO: BTC) critic Peter Schiff has sounded a cautionary note following a significant drop in Ford Motor Company (NYSE:F) shares. Schiff attributes the 12% plunge to the automaker's disappointing second-quarter earnings and has linked this to broader economic challenges.
What Happened: Schiff took to social media platform X to share his concerns about the recent performance of Ford. He pointed to the company's underwhelming second-quarter profits and bleak guidance as indicators of a larger economic struggle. Schiff attributed this to the financial strain on Americans, citing rising living costs and high interest rates on auto loans.
He wrote, "Ford shares are down 12% in after-hours trading, following lower than expected Q2 profits and weak guidance. This shouldn't be a surprise. Americans are broke. The cost of living is way up. They can't afford to buy new cars, especially with higher interest rates on auto loans."
This comes in the wake of Ford's second-quarter earnings report, which saw a 6% year-over-year increase in revenue, surpassing the Street's consensus estimate. Despite this, the company's earnings per share fell short, leading to a 37% decrease in revenue from its Ford Model e segment.
#Ford shares are down 12% in after-hours trading, following lower than expected Q2 profits and weak guidance. This shouldn't be a surprise. Americans are broke. The cost of living is way up. They can't afford to buy new cars, especially with higher interest rates on auto loans.
— Peter Schiff (@PeterSchiff) July 24, 2024
Why It Matters: The disappointing earnings report from Ford comes amid broader economic concerns. The company reported quarterly earnings per share of 47 cents, missing the Street consensus estimate of 68 cents.
Adding to the economic backdrop, a chorus of economists has been predicting that the Federal Reserve will soon begin cutting interest rates following a cooler-than-expected inflation report in June. The Consumer Price Index rose by 3% year-over-year, dropping from May's rate of 3.3%.
President Joe Biden emphasized the positive developments in a White House press release, noting that the latest report demonstrates significant progress in combating inflation.
Last week, New York Federal Reserve President John Williams hinted at a potential interest rate cut in the coming months, suggesting that the Fed might be closer to this decision than previously thought. Furthermore, mortgage rates have hit their lowest point since February as investors anticipate potential rate cuts by the Fed.
Price Action: Ford Motor's stock closed at $13.67 on Wednesday, down 1.16% for the day. In after-hours trading, the stock fell further 11.56%. Despite this drop, Ford's stock has risen 12.42%, year to date, according to the data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote