stock sank Monday, dragged down by a $1.7 billion jury verdict in a fatal rollover of a F-250 pickup truck.
On Friday, jurors in Georgia handed down the award—the largest in state history—to the family of Voncile and Melvin Hill who were killed in a 2014 crash, the Atlanta Journal-Constitution reported.
On Monday, Ford (ticker: F) told Barron’s that it plans to appeal the verdict. Shares were down 5.9%, to $14.96, in midmorning trading. The S&P 500 and the Dow Jones Industrial Average fell 1.7% and 1.5%, respectively.
The family of the Hills blamed the roof strength of the couple’s 2002 F-250 pickup truck for their deaths. The roof collapsed after the rollover.
In an email, Ford made clear its path forward on the case.
“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 spokesman wrote. “In the meantime, we aren’t going to litigate this matter through the news media.”
Punitive damages are generally less than 10 times compensatory damages, although that is only a guideline and varies by state said Carl Tobias, a law professor at the University of Richmond.
With the truck being 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 mostly financial.
Adjusted for how Ford typically trades relative to the market, Monday’s drop is worth roughly $2 billion—slightly more than the award. Something much larger might indicate investors are worried about a growing problem.
Product liability can impact the entire auto business.
(GM) shares fell 3.8% and Chrysler parent
(STLA) was down 5.5%.
(TSLA) stock was off 2.9%, not that far off the
2.1% decline. Shares stock might not be down as much because the company doesn’t have any vehicles as old as 2002. 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 email@example.com