On July 28, in early trading, Goodyear Tire & Rubber (NASDAQ:$GT) plummeted before recovering marginally in intraday trading.
At one point, the Ohio-based company was down more than 13%. However, the stock recovered and was trading about 10.5% below its open in midday trading.
What caused the drop? Many speculate it was because Wall Street was reacting to poor earnings from Goodyear Tire & Rubber as it cut its 2017 outlook to between the range of $1.6 billion and $1.65 billion from $2 billion.
The U.S. tire maker reported an adjusted net income of $177 million (70 cents per share), which is down from $314 million in 2016. This is significant as it is in line with economists polled by Thomson Reuters.
Tire unit sales dropped in two of the largest markets – the Americas and Europe, and the Middle East and Africa – to 2.9% and 11.7%. This created a domino-effect of sorts and caused a 10% drop in total tire unit sales. Goodyear Tire & Rubber sales in the Asia Pacific Market, which is the smallest market by far, grew 3%.
According to CEO Richard Kramer, fluctuations in the cost of raw materials and a competitive environment are the primary reasons for the company’s struggle.
For the year, Goodyear is up 3.11%. This is thanks to Friday’s drop below the S&P 500 Index of 10.13%.
Featured Image: Depositphotos/© wolterke
