The value of Ford stock decreased during the June 15th, 2020 – June 19th, 2020 timeframe. Shares closed the week at $6.23 per share, which represents a decrease of $0.23 per share, or 4 percent, compared to the prior week’s closing value of $6.46.
Movement & Ranges
For the sake of comparison, shares of Ford’s cross-town rival – General Motors Company – fell $1.37 per share, or 5 percent – during the June 15th, 2020 – June 19th, 2020 timeframe.
Ford Stock Factors
Ford stock has seen historically-low values during the COVID-19 pandemic, with some being the lowest recorded share values in over a decade. Compared to the $9.42 per share at which Ford stock opened the 2020 calendar year, this week’s value of $6.23 leaves the value of Ford shares $3.19 lower.
The COVID-19 pandemic forced industry-wide shutdowns, with Ford idling vehicle production across all geographic regions. Production remained idle for roughly two months, partially causing Ford to post a $2 billion loss for Q1 2020, while issuing a warning that it could lose as much as $5 billion during Q2.
COVID-19-related issues combined with concerns about the overall health of Ford’s business prior to the virus appear to be causing investor uncertainty. Even so, the noteworthy gains made in early June show increased investor confidence in the Dearborn-based automaker. Those gains came on the heels of restarted Ford production in China, followed by Europe and the U.S.
Most recently, the Volkswagen board approved the partnership with Ford wherein both automakers will share costs in developing and producing several vehicles around the world. Additionally, the tie-up will see VW investing several billion in Argo AI, an autonomous software firm backed by Ford.
Meanwhile, Ford should gain even further momentum later this year as it launches the all-new F-150 pickup – the company’s bread-and-butter product. Set to be revealed in June (in only four days, as we write this!) and launch towards the end of the year, the 2021 F-150 is expected to see a gradual rollout before hitting full stride in roughly two or three quarters following the start of production.
Additionally, Ford will also add several new products to its SUV lineup in the medium-term future. The first will be the Bronco Sport, which has colloquially been referred to as the “baby Bronco”, while the second is larger Ford Bronco. The Bronco Sport will begin to reach dealerships around September, while the latter will launch in early 2021. About 15 months after their respective launches, both the Bronco Sport and Bronco will gain pickup derivatives. The pickup variant of the Bronco Sport will likely be called Ford Maverick, while the name of the pickup model of the Bronco is currently unclear. All of these new models are expected to contribute significantly to FoMoCo sales volume and improve its financial health.
Recent analyses of Ford stock range from avoidance, with the value suffering further setbacks following the bankruptcy of Hertz – Ford’s customer in the area of daily rental cars. Other opinions state that we’ve overcome the greatest economic hump created by the pandemic, and that Ford has turned a corner as it readies a portfolio of profitable vehicles that will make positive contributions to its bottom line, making its stock undervalued.
Ford During COVID-19
The coronavirus pandemic forced Ford to idle production across North America, South America, Europe and China, putting the firm in a very disadvantageous position. The scenario results in revenues falling sharply, while burning through cash at an accelerated pace, resulting in a loss-making scenario for Ford (or for any automaker, for that matter)
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. The restart in production hasn’t been without a completely smooth endeavor, as various facilities were forced to pause production for up to 24 hours for cleaning and area disinfection after workers tested positive for COVID-19.
Ford has taken major steps to steer through the COVID-19 pandemic. The automaker’s actions have primarily revolved around reducing and/or deferring expenses and shoring up cash. To that end, Ford suspended its dividend while borrowing $15.4 billion in March before borrowing another $8 billion in April.
While it was taking all of these actions during idled vehicle production, The Blue Oval has been producing shields, face masks, and respirators to help medical workers fight the virus on the front lines. Ford will continue making the PPE, at an accelerated pace in some instances, now that vehicle production has restarted,
Ford is also 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 various business-related issues well before the global COVID-19 outbreak, including lack of profitability in several key vehicle lines and in international regions, along with quality issues in critical product launches. To that end, Ford CEO Jim Hackett replaced Joe Hinrichs with Jim Farley as COO, allegedly due to major issues associated with the rollout of the all-new 2020 Ford Explorer and Lincoln Aviator – two key models that come at a 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 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.
It’s worth noting that 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. That tie-up was put into motion in an official capacity in early June.
In November 2019, Ford announced the new Ford Mustang Mach-E – an electric, four-door crossover inspired by the legendary Mustang pony car. Set to hit showrooms in early 2021, 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.