The value of Ford stock increased during the November 30th, 2020 – December 4th, 2020 timeframe. Shares closed the week at $9.34 per share, which represents an increase of $0.25 per share, or more than 2 percent, compared to the prior week’s closing value of $9.09.
Movement & Ranges
By comparison, shares of Ford’s cross-town rival – General Motors Company – decreased $0.66 per share, or under 1 percent, during the November 30th, 2020 – December 4th, 2020 timeframe.
Ford Stock Factors
The increase in Ford share values this week comes after last week’s growth rate of four percent, which in turn followed a jump of two percent. Over the last five weeks, Ford share values have steadily increased, although the fluctuation in prices was notable. Analysts have expressed mixed opinions about Ford stock, with some suggesting it represents a solid buy at the moment, with Barron’s recently acknowledging the impact newly-appointed Ford CEO Jim Farley has already had on the company.
One notable event this week was the reporting of the Ford Motor Company’s November 2020 sales, a first for the company in a while, as it had previously switched to a quarterly reporting model before reversing that course of action in October. While sales were down 21 percent, the overall decrease was negatively impacted by the 2021 Ford F-150 changeover and the winding down of discontinued models like the Ford Fusion and Ford Fiesta. Overall retail sales decreased 16.7 percent, or slightly more than the estimated 15 percent industry average. However, Ford Super Duty sales remained strong, increasing 7.5 percent year-over-year, a factor that may have given investors a bit more confidence in Ford as it navigates through the fallout of COVID-19.
Meanwhile, other investors are holding on to the belief that Ford’s dividend suspension will soon end. Moreover, The Blue Oval is currently being run in a similar fashion to a big tech company, a rather appealing attribute in today’s tech-centric climate. That said, Morgan Stanley did downgrade Ford stock two weeks ago, based on what it found to be a lagging EV strategy.
Ford’s third quarter 2020 earnings, which were headlined by $2.4 billion in net income on revenue of $37.5 billion, offered a surge of momentum for Ford stock. During the timeframe, sales decreased 5 percent to 551,796 units in the U.S., representing a very healthy recovery after the COVID-riddled Q2. It’s worth noting that Ford stock jumped 5 percent when the automaker reported its Q3 earnings, marking the largest single-day percentage gain since June 5th.
“Despite the challenging pandemic environment, our retail unit sales were down only 2 percent and we had our best third quarter of pickup truck sales since 2005,” said Mark LaNeve, Ford vice president, U.S. Marketing, Sales and Service, in describing FoMoCo’s Q3 2020 U.S. sales results. “F-Series finished the quarter on a high note with September sales up 17.2 percent with over 76,000 F-Series pickups sold. This is a testament to our winning product portfolio and the performance of our great dealers,” he added.
Ford sales increased 25 percent in China during the third quarter of 2020, building on the three percent growth experienced during the second quarter of 2020. Notably, Q3 2020 represented FoMoCo’s single biggest sales increase in China since 2016.
Mr. Farley’s recent statements about affordable EVs and his goal of curbing warranty costs could also be positively influencing current values. Additionally, the new CEO recently outlined key goals and organizational changes, which include:
- An expansion for Ford’s leading commercial vehicle business with a suite of software services that drive loyalty and recurring revenue streams.
- Offering compelling, uniquely Ford fully electric vehicles at scale around the world, including the Ford Transit, Ford F-Series, Ford Mustang, SUVs, and Lincoln models.
- Adding more affordable vehicles to Ford’s global lineup, including in North America.
Another noteworthy factor is the overwhelmingly positive reception of the all-new 2021 Ford Bronco and 2021 Ford Bronco Sport. In fact, Ford stock experienced four consecutive weeks of growth following the reveal. The limited-production First Edition model of the Bronco two-door and four-door sold out in just a few hours, prompting Ford to double availability. The Bronco Sport First Edition sold out in less than two days. All three Bronco models have seen massive interest, causing significant traffic spikes on the automaker’s website as Bronco reservations exceeded 165,000 in the first three weeks of availability. The Ford Bronco Sport started rolling out to dealers last month, with 22 units being sold in November 2020.
Ford announced the 2021 Ford Bronco would be delayed following pandemic-related supplier disruptions after trading closed on December 4th, 2020. The delay will potentially impact Ford’s stock value once trading opens the morning of December 7th, 2020.
Besides the Bronco and Bronco Sport, Ford is currently launching the all-new 2021 F-150 – its most profitable and revenue-generating product. The all-new half-ton, full-size pickup features a significant amount of updates and new features, along with an all-new exterior and interior.
Production of the 2021 F-150 started on September 17th, 2020 at the Ford Dearborn Truck plant within the Ford Rouge Center complex, while production commenced at the Ford Kansas City plant on November 19th, 2020. The truck will see a gradual rollout before hitting full stride in roughly two or three quarters after start of production. Additionally, Ford recently broke ground on a new plant within the Rouge Center. Termed the Ford electric vehicle center, the new facility will build the upcoming electric F-150, which is slated for launch in 2022. Ford recently increased production capacity at the plant by 50 percent.
Prior to the reveals of the F-150 and Bronco family, Ford and Volkswagen agreed upon the finer details of a new partnership wherein both automakers will develop and produce several vehicles. Additionally, the tie-up will see VW invest several billion in Argo AI, an autonomous software firm backed by Ford. Speaking of partnerships, recent reports indicate the Ford-Rivian partnership is “going great” and that a new Ford model stemming from the tie-up is on track.
Ford stock has seen historically-low values during the COVID-19 pandemic, with some being the lowest recorded in over a decade. This week’s $9.34 per share price places the value $0.08 below the $9.42 per share mark at which Ford stock opened the 2020 calendar year.
The Blue Oval has had to navigate unprecedented setbacks during COVID-19. For starters, the Coronavirus pandemic forced Ford to idle production across North America, South America, Europe and China, putting the firm in an unfortunate position. The scenario resulted in a steep decline in revenues and an accelerated cash burn, 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 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 also helped suppliers get through the trough created by the pandemic by paying its bills ahead of schedule.
In May, Jim Farley, who at the time served as COO, bought $1 million in Ford stock, making it the largest open-market share purchase by a Ford executive in a decade. Then, in early August, then-Ford CEO, Jim Hackett, announced an early retirement. He is succeeded by Farley.
More recently, Ford share values have experienced steady growth since the automaker released its second quarter 2020 earnings, wherein FoMoCo lost $1.9 billion in the midst of the COVID-19 pandemic. The results are much better than the $5 billion Ford initially expected to lose when going into the quarter.
The fitness of the Ford Motor Company had several 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 associated with critical product launches. To that end, then-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 and into 2021, especially in light of various actions taken by the Dearborn-based automaker in 2019 and 2020 to improve the fitness of its business. These actions include discontinuing all sedans to focus on more profitable crossovers, SUVs, and pickups 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 like the Ford E-Transit.
“They key here is, not just for us, the sedan segment itself has been in decline for a very long time, and that decline has been accelerating over the last few years,” Kumar Galhotra, President of Ford North America, told Ford Authority executive editor, Alex Luft, in a recent interview.
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.
Production of the Mach-E kicked off in late October, and the very first units of the all-new Ford Mustang Mach-E will soon begin to arrive at dealers. The Mach-E is an electric, four-door crossover-like hatch inspired by the legendary Mustang pony car. More than anything else, the Mustang Mach-E demonstrates that Ford isn’t afraid to redefine legendary nameplates, and recreate them in new body styles and as new vehicle types.
Ford initially sold out the introductory Mustang Mach-E First Edition variant – a promising development that should serve as an indicator of future Ford share values. However, First Editions of the vehicle recently became available once again as a result of higher production. Pricing for the 2021 Mach-E, which will start at $43,895, as Ford Authority recently reported.