The value of Ford stock increased during the May 18th, 2020 – May 22nd, 2020 timeframe. Shares closed the week at $5.65 per share, which represents an increase of $0.75 per share, or over 15 percent, compared to the prior week’s closing value of $4.90.
Movement & Ranges
For the sake of comparison, shares of Ford’s cross-town rival – General Motors Company – rose $3.35 per share, or nearly 15 percent – during the May 18th, 2020 – May 22nd, 2020 timeframe.
Ford Stock Factors
Ford share values continue to see historic lows amid the COVID-19 pandemic, with recent values being among the lowest recorded in over a decade. The current value of $5.65 is roughly half of the $9.42 per share value that Ford stock opened the 2020 calendar year.
Concerns remain about the overall health of Ford’s business, including effects caused by COVID-19 as well as issues that persisted before the virus.
That substantial decline was caused by the COVID-19 pandemic, as Ford was forced to idle vehicle production across all geographic regions. Production remained idle for about two months, partially causing Ford to post a $2 billion loss during its Q1 2020 earnings, while issuing a warning that Q2 earnings can total as much as $5 billion.
Since then, Ford production has restarted in China and Europe. The automaker restarted production in the U.S. on May 18th, which is likely the reason for the 15 percent growth in Ford stock value during the week.
Ford During COVID-19
The coronavirus pandemic forced Ford to idle production across North America, South America, Europe and China as a result of the virus, putting the firm in a very unfavorable position. During such a scenario, any automaker – including Ford – sees revenues fall sharply while rapidly burning through cash, resulting in a loss-making turn of events. Since the beginning of the pandemic, Ford production in China resumed in March, Ford Europe production started back up on May 4th and most North American Ford production resumed on May 18th, though the Chicago plant closed for 24 hours as two workers tested positive for COVID-19.
Ford has taken major steps to navigate the COVID-19 pandemic, with the actions primarily revolving around reducing and/or deferring expenses and shoring up cash. For instance, Ford suspended its dividend while borrowing $15.4 billion in March, followed by borrowing another $8 billion in April.
While it was taking all of these actions during suspended vehicle production, The Blue Oval has been producing shields, face masks, and respirators to help medical workers fight the virus on the front lines. Now that vehicle production has restarted, Ford will continue making the PPE, ramping up production of some items.
It also became known this week that Ford is helping suppliers get through the trough created by the pandemic by paying its bills ahead of schedule.
A recent data point worth noting is that Ford COO Jim Farley bought $1 million in Ford stock, making it the largest open-market share purchase by a Ford executive in a decade.
Ford Stock Before COVID-19
Ford Motor Company was having issues well before the global COVID-19 outbreak, including lack of profitability in several key vehicle lines and in various international markets, along with quality issues in key product launches. To that end, Ford CEO Jim Hackett replaced Joe Hinrichs with Jim Farley as COO, allegedly due to major issue associated with the 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 in late April. 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.
The Mustang Mach-E also demonstrated 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.
In 2020, Ford plans to launch an all-new F-150 pickup. Set to launch in the fall of 2020 as a 2021 model, the 2021 F-150 will likely see a slow rollout before hitting full stride in roughly two or three quarters following job one. The Dearborn-based automaker will also reveal two new additions to its utility lineup – the Bronco Sport, which is colloquially referred to as the “baby Bronco”, as well as the larger Ford Bronco. The former will go into production in September, while the latter will launch in early 2021. All three all-new models are expected to deliver positive contributions to FoMoCo’s financial health.