A large jury award against Ford has investors nervous Monday.
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Ford Motor stock was falling in premarket trading Monday because of a potentially large legal bill.
A jury in Georgia on Friday awarded $1.7 billion to the family of Voncile and Melvin Hill who were killed in a 2014 accident. It’s the largest award in state history, according to the Atlanta Journal-Constitution.
The family of the victims blamed the roof strength of the couple’s 2002 Ford (ticker: F) F-250 pickup truck. The roof collapsed after the vehicle rolled over.
Ford stock was down 3% early Monday trading. S&P 500 and Dow Jones Industrial Average futures fell 1.2% and 0.9%, respectively. Ford stock dropped 1.7% on Friday, while the S&P dropped 1.2%.
Ford plans to appeal the verdict. “While our sympathies go out to the Hill family, we don’t believe the verdict is supported by the evidence, and we plan to appeal,’ a Ford spokesman told Barron’s in an emailed statement. “In the meantime, we aren’t going to litigate this matter through the news media.”
With the truck 20 years old, investors probably aren’t drawing any implications about operating or quality issues in vehicles made today. The impact on the stock looks to be financial.
Ford shares were down more than the market Monday morning. Adjusted for how Ford typically trades relative to the market, the extra drop is worth roughly $1 billion. A number greater than the award amount might indicate investors are worried about something growing from the jury award.
Product liability can impact the entire auto business. General Motors (GM) shares fell more than 2% in premarket trading as well. Chrysler parent Stellantis (STLA) fell about 4.3%.
Tesla (TSLA) stock was down about 2% as well, although that’s about the drop investors would expect with Nasdaq Composite futures off about 1.4%. Tesla stock might not be down as much because it doesn’t have any vehicles as old as 2002 in the marketplace. The first Model S was first delivered in mid-2012.
Coming into Monday trading, Ford shares have declined about 23% this year. Higher inflation and rising interest rates have created some concern for investors regarding profit margins as well as consumer demand for new cars.
Write to Al Root at allen.root@dowjones.com
Source: finance.yahoo.com