- Ford Motor (F) stock fell on earnings that looked good under the hood.
- To become a tech stock, Ford must go to war against itself.
- Dividend investors are still the biggest winners in F stock.
Ford Motor (NYSE:F) bulls tried to make it a tech stock last year. They got their wish in the worst possible way.
On the back of analyst recommendations, Ford rose like a tech stock in 2021, with a January high of over $25/share. Since then, it has fallen like a tech stock. It opened for trade April 29 at $14.50/share.
As a car stock, Ford is still a work in progress. Ford reported an operating profit of , on revenue of $34.5 billion. This became a net loss of $3.1 billion, 78 cents per share, on the $4.85 billion loss it took on stock in Rivian (NASDAQ:RIVN), the electric car start-up it invested in alongside Amazon (NASDAQ:AMZN).
| F | Ford Motor | $14.49 |
Reasons to Believe in Ford
There are a lot of reasons to be hopeful about Ford’s future.
The first-quarter number , when the Rivian loss is taken out.
Ford’s reorganization is going according to plan. It plans to milk profits at Ford Blue, which is making gas-powered vehicles, and in Ford Pro, which will sell directly to commercial accounts. It plans to invest heavily in . Model e is being run by Doug Field, whose previous job was at Apple (NASDAQ:AAPL), but who has worked at Ford and Tesla (NASDAQ:TSLA).
Ford has already sold out 2022 production of its electric and the electric There’s even good news for car buyers, as total car inventory in March.
The best news may be
It’s built on a Ford Bronco chassis but gets 37 miles to the gallon, 42 miles in town with its electric motor. Its price starts at around $20,000 and it’s outselling the Toyota (NYSE:TM) Tundra. It, too, is sold out for 2022, and the company is taking orders on next year.
Why F Stock Dropped
Despite the good news, Ford stock still dropped 17% in April.
Bears the loss on Rivian. A chip shortage. The company has had to temporarily that makes the Mustang, due to a parts shortage. Management admitted results would have been better without the parts shortages. 91¶¶Òõ when the Lightning debuted. There are worries that the Maverick as advertised.
The biggest problem is more basic, Ford’s dealer network, which is . When times are good, as they have been, the dealers take extra profit by selling above retail. That means Ford doesn’t get the full benefit of high demand, as Tesla does.
Fat dealer markups . Dealers also have political power, which was once used mainly to fight Tesla but is now deployed to maintain their advantages over manufacturers.
The Bottom Line on F Stock
Ford is still a car company, not a tech company.
Ford manufactures cars with a complex supply chain and sells them through dealers. Tesla, on the other hand, controls its supply chain and has cut out the middlemen.
The value of this difference is currently $850 billion. That’s the difference between the market capitalizations of Tesla and Ford.
Ford does deliver what Tesla refuses to, that currently yields 2.64%. But analysts still . The latest price target at Barclays (NYSE:BCS) is , that’s barely 10% over where Ford is currently trading.
To become a tech stock like Tesla, Ford needs to do more than reorganize. It needs to go to war against itself.
On the date of publication, Dana Blankenhorn held long positions in AAPL and AMZN. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.
