The value of Ford stock decreased during the April 20th, 2020 – April 24th, 2020 timeframe. Shares closed the week at $4.87 per share, which represents a decrease of $0.25 per share, or 5 percent, compared to the prior week’s closing value of $5.12.
Movement & Ranges
For the sake of comparison, shares of Ford’s cross-town rival – General Motors Company – dropped $0.53 per share, or over 2 percent – during the April 20th, 2020 – April 24th, 2020 timeframe.
Ford Stock Factors
Ford share values continue to see historic lows amid the COVID-19 pandemic, with the values seen during the past few weeks being among the lowest recorded in over a decade. The current value of $4.87 is about half the $9.42 per share value that Ford stock opened the 2020 calendar year.
The Coronavirus has resulted in the automaker temporarily idling production in North America as well as several other international markets, while suspending its dividend as it borrows $15.4 billion in March as well as another $8 billion in April.
A circumstance wherein Ford (or any other automaker, for that matter) does not produce any vehicles presents a very unfavorable situation for the firm, causing revenues to fall sharply, resulting in a loss-making situation. To that end, Ford initially announced that it expects to incur about $600 million in losses during the first quarter of 2020, but has since revised that figure to be around $2 billion. Meanwhile, damage sustained by the production facility as a result of a tornado could cause further disruptions in the availability of key the most popular and most profitable FomoCo vehicles including the F-150, Expedition, Explorer, Navigator and Aviator, leading to even more negative impact to Ford’s bottom line.
There currently seem to be two schools of thought when it comes to investing in Ford. On the one hand, there are those who think that, due to the complications caused by COVID-19, things will get worse before they get better. In fact, Deutsche Bank Analyst Emmanuel Rosner recently stated that Ford has “15 [to] 17 weeks of liquidity under shutdown conditions before hitting its minimum cash levels.” On the other hand, analysts and investors see Ford stock as a major buy opportunity at their current, depressed levels.
Earlier this week, Ford was in talks with the UAW union about when to re-open plants to begin producing vehicles.
It’s also worth noting that Ford Motor Company was having issues prior to the global COVID-19 outbreak, among which were lack of profitability in several vehicle lines and in various international markets, along with quality issues in key product launches. Ford CEO Jim Hackett replaced Joe Hinrichs with Jim Farley as COO, allegedly due to the botched rollout of the all-new 2020 Ford Explorer and Lincoln Aviator – two key models coming to market at a rather critical time, given the popularity of crossovers and SUVs.
Ford announced even more changes to its executive ranks last week. The changes, made by recently-appointed COO Jim Farley after a 10 week-long deep dive, were presented as a way to “better serve customers, streamline decision-making and increase accountability.”
Coronavirus-related items aside, we remain interested in seeing how Ford stock will perform throughout the rest of 2020, especially in light of various actions taken by the Dearborn-based automaker throughout 2019 and into 2020. The company has taken steps to optimize its business by discontinuing all sedans to focus on more profitable crossovers, SUVs, and pickup trucks in North America, while at the same time investing in resource-intensive autonomous vehicle technologies like its Argo AI autonomous service as well as electric vehicles. Both initiatives have yet to result in a positive ROI for any automaker.
The Blue Oval started both efforts much later than its direct rivals. For instance, FCA was the first to discontinue most of its sedan portfolio and General Motors started to invest heavily into EVs and autonomous vehicles much earlier than The Blue Oval. In July 2019, Ford announced details of its partnership with Volkswagen that would result in VW investing in Ford’s Argo AI venture.
In November 2019, The Blue Oval announced the new Ford Mustang Mach-E – an electric, four-door crossover inspired by the legendary Mustang pony car. Set to go on sale in about a year, the vehicle represents the direction in which Ford is going as a company and where it’s taking its vehicle lineup. It also shows that Ford isn’t afraid to upend legendary nameplates. Initially, Ford stock didn’t see any movement in value following the announcement. However, the automaker sold out the introductory Mustang Mach-E First Edition variant, which is a promising development, if it should serve as an indicator of future Ford share values.
Ford also plans to launch an overhauled version of its F-150 pickup this year. Set to launch toward the end of the 2020 calendar year as a 2021 model, the 2021 F-150 will likely see a slow rollout before hitting full stride in roughly two or three quarters. The Dearborn-based automaker will also reveal two new utility additions to its product line – the Bronco Sport, which is colloquially referred to as the baby Bronco, as well as the Ford Bronco. According to Ford Authority intel, the former will go into production in September, while the latter will begin production in early 2021. All three all-new models are expected to deliver positive contributions to FoMoCo’s financial health.