Shares of Goodyear Tire & Rubber (GT 0.91%) plunged as much as 16.7% in trading on Thursday after reporting second-quarter 2024 financial results. The stock closed down 15.9% on the day.
Weak sales hit Goodyear stock
Revenue for the quarter was $4.57 billion, down from $4.87 billion a year ago. But the company swung from a loss of $208 million to a profit of $85 million, or $0.30 per share.
Earnings on an adjusted basis of $0.19 per share topped analysts' $0.14 estimate, but revenue was a different story. Wall Street was expecting $4.78 billion in revenue, which the company fell well short of.
Falling tire sales don't bode well
Goodyear is cutting costs in order to get back to profitability, but that's now starting to impact sales of tires overall. Unit sales fell from 20.8 million tires a year ago to 19.6 million last quarter. For the first six months of the year, tire sales have fallen 6.5% to 38.6 million units.
Those trends aren't good for any manufacturer, even if profitability has improved. The bigger challenge is that analysts were expecting a jump in revenue in the second half of the year and that now seems like it's in question after these results.
Sometimes stocks are cheap for a reason and Goodyear falls into that category. Every car needs tires, but that doesn't mean the market isn't extremely competitive or that margins will be high, which is why the stock hasn't gone anywhere for decades.
