Thursday was another mixed day on Wall Street, as major benchmarks moved in opposite directions. With relatively little news on the macroeconomic or geopolitical front, earnings season continued to take center stage. Dozens of S&P 500 companies reported their latest results, and it was easy to find both winners and losers. Ford Motor (NYSE: F), Nokia (NYSE: NOK), and eBay (NASDAQ: EBAY) were among the worst performers. Here's why they did so poorly.
Ford sees tougher times ahead
Shares of Ford Motor fell 7% after the automaker reported its third-quarter financial results. Ford did reasonably well during the period, seeing adjusted earnings per share climb 17% year over year despite modest drops in revenue and wholesale unit shipment volume. Profits in North America outweighed small losses elsewhere. Yet investors weren't pleased that the company said it expects costs from recalls and incentive payments to U.S. buyers to weigh on its future performance, and weak sales in the key Chinese market also contributed to its decision to cut its earnings guidance for the full year. With global automakers dealing with sluggish economic conditions around the world, it's essential for Ford to make the most of the U.S. market as long as it holds up.
Nokia makes a big bet
Nokia's stock plunged 24% following the telecom equipment specialist's release of its financial report for the third quarter. On one hand, Nokia said that it posted a solid performance for the quarter, including growing sales and positive free cash flow, and it sees the fourth quarter bringing further strength to the company's results. Yet in the long run, Nokia sees great importance in capitalizing on the upgrade to 5G wireless networks, and it believes it needs to make more aggressive investments toward taking full advantage of the move. The company therefore cut its earnings outlooks for 2019 and 2020, and it also chose to stop paying its dividend in order to divert more cash toward strategic areas of its business. That disappointed many investors who'd liked Nokia's 4.5% dividend yield, and it shows just how competitive the telecom equipment industry will be for the foreseeable future.
eBay isn't predicting happy holidays
Finally, shares of eBay dropped 9%. The online marketplace said that revenue for the third quarter of 2019 was roughly flat from year-ago levels, and gross merchandise volume declined 4% over the same period. Yet active buyer counts were up slightly, and adjusted net income was higher by 2% year over year. What made investors nervous, however, was eBay's projections for organic revenue growth of -1% to 1% for the fourth quarter. That signaled a lackluster holiday season, and for a company that relies on the retail volume that gift giving brings in abundance, eBay didn't give shareholders the confidence they wanted about its ability to get back to a stronger growth path.
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Dan Caplinger owns shares of Ford. The Motley Fool recommends eBay and Nokia and recommends the following options: long January 2021 $18 calls on eBay. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.