AKRON — Goodyear lost 42 percent of its market value in 2018, as its stock plummeted from more than $34 a share in January 2018 to about $20 per share recently.
The company has been facing a challenging environment, with high raw material costs, a tough market for price increases, lower demand for its tires in the U.S. and some other markets, and a slowing Chinese economy.
So, what's in store for the Akron icon?
The company and at least some of the analysts following it think Goodyear can wait for conditions to swing around in its favor, something the 120-year-old company has done many times.
Others say it could face pressure to change, possibly even from an activist investor if one chooses to take advantage of the company's vulnerable position.
"It's not a vote of confidence when your stock drops from $40 to $20. I'm surprised there's not an activist in there now," Anthony Deem, an analyst who follows Goodyear at Independence-based Longbow Research, said.
Mr. Deem, who's often critical of Goodyear, has not been taken totally by surprise by the drop in the company's stock.
"I didn't think the stock would drop as precipitously as it has, but I think it's justified," Mr. Deem said.
Others think the market has overreacted and don't blame Goodyear.
"The tire business is one that's incredibly complex," John Healy, an analyst at Northcoast Research in Cleveland, said.
"There's a chemistry business to it in terms of research and development and creating a quality product. Then there's a very challenging manufacturing side of things, and there's the sales on a global basis. … Then there's also the impact of raw materials and foreign exchange (currency) movements. It makes it just a tough business to manage."
Mr. Healy, a value investor, has a buy recommendation on Goodyear's stock.
He and Mr. Deem agree, along with the company, on some of the things Goodyear needs to do: Build and maintain capacity for high-value tires, enforce higher pricing, regain some market share at home and abroad, and, perhaps most important, stop surprising the markets with bad news.
That last point has been particularly painful to watch, analysts say, because the wounds of missing earnings guidance are largely self-inflicted in their eyes, and they cost the company dearly in credibility with investors.
"That was one of the big problems with the stock last year. The company didn't have reliable forecasting. I think in something like 12 of the last 14 quarters they've revised their guidance," Mr. Deem noted.
He and others said Goodyear may have addressed that issue by bringing back its former chief financial officer, Darren Wells, who they say ran a tighter ship before he left the company in 2013.
Mr. Wells seems to have taken his lumps early by removing the company's earnings guidance for the year, but investors went from expecting operating profits of $1.8 billion at the start of 2018 to $1.3 billion, and, now, perhaps a bit less. The company is scheduled to release its 2018 results on Feb. 14.
Christina Zamarro, vice president of finance, said the company is addressing its issues, though some will take time to resolve.