Flirting With The Lows

After yesterday’s close, Ford warned investors that inflation and supply chain issues would cost it an extra $1 billion during the third quarter. 🔺

Parts shortages have prevented 40,000-45,000 vehicles from reaching its dealers, mainly high-margin trucks and SUVs. However, it expects to be able to ship those vehicles during Q4.

Executives reiterated their full-year guidance, projecting 2022 adjusted EBITDA of $11.5-$12.5 billion. They also said they’d “provide more dimension about expectations for full-year performance” at its third-quarter earnings release on October 26th. 📅

Supply chain issues have affected most industries throughout the pandemic, hitting automakers particularly hard. In July, General Motors warned investors that it had about 95,000 vehicles lacking some components. ⚠️

Overall, while the company remains optimistic, investors appear less so. $F shares were down 5% after hours and are down 11% so far in today’s session. 👎

While fourteen-year highs in mortgage rates and record-high prices keep a lid on the overall housing market, rising rents pushed the construction of multi-family housing to 36-year highs in August. Starts for housing projects with five units or more soared 28.6% to 621,000 units. Meanwhile, single-family housing starts rose 3.4% to a rate of 935,000 units. 🏘️

This strength pushed the seasonally adjusted annual rate of housing starts up 12.2% to 1.575 million in August. However, the report revised July’s data down from 1.446 to 1.404 million.

Although housing starts were strong, building permits dropped 10.0% to the lowest level since 2020. Single-family building permits dropped 3.5%, and multi-family permits fell 18.5%. 📉

Overall though, the housing market remains in rough shape.

Homebuilder sentiment has dropped for nine straight months, with a quarter of builders dropping prices to attract buyers. With the Fed expected to continue hiking rates tomorrow and into 2023, affordability isn’t likely to get better anytime soon. That means prices will have to come down to meet demand. Or so the Fed hopes. 🤷

Tomorrow’s reports from $LEN and $KBH should provide additional color on housing. Though a quick look at stocks like $OPEN, $Z, and $RDFN paint a pretty bleak picture… 🙀

Technology and consumer discretionary companies have been hit hard by rising interest rates and recession fears. Unfortunately for online personal styling service Stitch Fix, its business sits at the intersection of both industries. 📌

The company reached a peak market cap of $11 billion in early 2021 and has been sinking since, reaching $500 million ahead of today’s earnings report. 🔻

Both its diluted loss per share ($0.89 vs. $0.60) and revenues ($481.9 million vs. $488.79 million) missed expectations. Additionally, the company reported a 9% YoY decline in clients (3.795m).

While this quarter’s results disappointed, its guidance for the coming quarter added insult to injury. Management expects revenue of $455-$465 million, a 20-22% YoY decline and well below the $528 million analysts expected.

While the company continues to focus on a return to profitability, it noted: “Today’s macroeconomic environment and its impact on retail spending has been a challenge to navigate…” Sounds very familiar to what we’ve heard from other retailers about the current environment. 😬

$SFIX pared its losses after hours but remains near all-time lows as investors weigh its future. 📉