Shares of Goodyear Tire & Rubber (NASDAQ: GT) experienced a significant decline on Thursday following the company’s unexpected loss in the second quarter. The stock has been down 18% to $12.90 during morning trading, even though it had risen 27% since the beginning of the year.
Goodyear, an Akron, Ohio-based tire manufacturer, reported a loss of $208 million, or 73 cents per share, compared to a profit of $166 million, or 58 cents per share, in the same period last year. This result fell far below the expectations of analysts polled by FactSet, who anticipated a per-share profit of 14 cents.
Furthermore, the company’s sales dropped from $5.21 billion in the prior year to $4.87 billion this year, which also fell short of analysts’ projected $5.21 billion, according to FactSet.
In a recently released letter to investors, Goodyear attributed its poor performance to a decline in industry volume for consumer replacement and weaker commercial trucking overall. The company further stated that it has revised its industry outlook for consumer and commercial replacement for the second half of this year.
In response to pressure from activist investor Elliott Management, which currently holds a 10% stake in the company, Goodyear announced on July 25 that it would be adding three new board members. In May, Elliott Management expressed concern over the underperformance of the company’s shares and urged it to optimize its store network while examining strategies to improve margins.