The value of Ford stock fell five percent during the April 26th, 2021 – April 30th, 2021 timeframe. Shares closed the week at $11.54, which represents a decrease of $0.68 per share, or about 5.6 percent, compared to the prior week’s closing value of $12.22.
Movements & Ranges
By comparison, shares of Ford’s cross-town rival – General Motors Company – decreased $0.31 per share, or 0.5 percent, during the same timeframe.
Ford Stock Factors
The moderate drop in Ford share values during the week followed a flat performance the week prior, which in turn followed a two percent drop. The value of Ford stock has been fluctuating over the past several weeks but remains higher than the $9.00 per share figure that closed out the first week of trading in 2021. The investment sector seems to be steadily warming up to The Blue Oval, as major institutions such as Barclays have upgraded the rating of Ford stock due to the company’s ongoing pivot towards electrification.
The big news during the week was The Blue Oval’s Q1 2021 earnings report, which paired some good news with an extremely dire outlook on the state of the company’s ability to produce vehicles through Q2 2021. Despite the economic uncertainty that COVID-19 has inflicted upon the world, the company was able to eke out $3.3 billion of income on $36 billion in revenue.
That relatively encouraging development was balanced out by a far more concerning bit of information, however. Ford is continuing to experience fallout from the ongoing microchip shortage, and the situation is expected to deteriorate further in the short term, as the automaker is bracing for a whopping 50 percent reduction in its vehicle output during that timeframe. Investors were no doubt aware of that recent disclosure, hence the drop in share values.
While a severe reduction in vehicle output seems to be an inevitability for Ford, the automaker is already being forced to pause production at plants responsible for building its most important vehicles. During the week, the company announced that the Ford Hermosillo plant that builds the 2021 Ford Bronco Sport will be idled for two weeks. The news follows similar reports of 2021 Ford F-150 production being sidelined due to a lack of parts, while incomplete examples sit all over metro Detroit. Despite the relatively dire situation facing Ford, the drop in share values could have been worse, and the fact that the shortage is industry-wide could potentially explain why Ford stock failed to experienced a sharper decrease in value during the week.
In fact, there are several reasons that can potentially explain why Ford share values might not fall back down to 2020 levels. For starters, demand for used and new vehicles remains extremely high, which means that the company will most likely have little trouble selling the vehicles that it can produce. Additionally, Ford’s all-new product launches have been successful, as vehicles like the 2021 Ford Bronco Sport and 2021 Ford Mustang Mach-E are getting gobbled up quickly due to their desirable traits and the positive press that surrounded their debuts. Ford CEO Jim Farley has also been quite forthcoming about the company’s transition to full electrification, a tactic that appears to be mollifying Wall Street even with the chip shortage wreaking havoc on the company’s production operations.
Prior to these developments, Ford also posted some encouraging sales numbers when it reported its Q1 2021 sales results, which showed the Ford brand increasing its retail market share by 0.3 percent from March 2020. The Blue Oval’s impressive performance was due in large part to demand for three all-new models – the 2021 Ford F-150, 2021 Ford Bronco Sport, and 2021 Ford Mustang Mach-E.
The recent partnership between Ford and Google could potentially help boost the value of Ford stock, although the fruits of this collaboration are still in gestation. The tie-up will see both companies work together to improve Ford’s internal technological operations. Additionally, most Ford and Lincoln vehicles will come equipped with a variant Google’s Android operating system starting in 2023. The move was seemingly well received by Wall Street, which drove up the value of Ford shares on the day FoMoCo publicly revealed the agreement.
Additional actions taken by Ford may have impacted share values recently. A prime example is the announcement that Ford will shutter all manufacturing operations in Brazil. Ford has notoriously been an also-ran in most South American countries, with the markets generally dominated by Volkswagen, Chevrolet, PSA and FCA. Given how sharply the value of Ford stock rose directly after the company made its plan known, investors clearly viewed that step as a sign that Ford is serious about improving the fitness of its business, especially in underperforming regions.
Ford sales increased 30 percent in China during the fourth quarter of 2020, building on the 25 percent growth experienced during the third quarter of 2020. Notably, Q4 2020 represented FoMoCo’s single biggest sales increased in China since 2016.
Meanwhile, CEO Jim Farley’s recent statements about affordable EVs and his goal of curbing warranty costs could also have positively influenced past share 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.
- Doubling the amount of money spent on EV development, to $22 billion through 2025.
- Having Ford Europe transition to zero-emissions vehicles by 2027 and switch completely over to full EVs by 2030.
- The launch of Ford Ion Park, a facility designed to facilitate R&D initiatives on battery production.
Earlier in 2020, investors were seemed encouraged by 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 of the off-roaders. The limited-production First Edition 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 in late November 2020. Ford moved 5,120 examples of the Bronco in December 2020 and has roughly sustained that sales metric through the end of February 2021.
Besides the Bronco Sport and (slightly delayed) Bronco, 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 is turning very fast. The truck, which faces constrained supply, features a significant amount of updates and new features, along with an all-new exterior and interior. An all-new, third-generation F-150 Raptor joins the F-150 lineup later this year.
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 $11.54 per share price places the value at $2.12 above the $9.42 per share mark at which Ford stock opened the 2020 calendar year, which may be a sign that a more sustained turnaround is on the horizon, although the global economic and political climate remains in a very precarious state right now.
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, and for the industry at large.
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. Additionally, supplier-related disruptions have forced Ford to temporarily suspend production at the Ford Louisville Assembly plant, which produces the Ford Escape and Lincoln Corsair. That shutdown comes after the earlier supplier disruption which prompted Ford to delay the launch of the 2021 Ford Bronco, which will now reach dealerships in mid-2021.
Ford has also announced that certain versions of the Bronco Sport are seeing delays, and the ongoing microchip shortage – another COVID-19 related complication – forced The Blue Oval to suspend production at the Ford Saarlouis Body and Assembly plant in Germany for one month and cut two shifts at the Ford Chicago Assembly plant during the first week in February. The Chicago plant produces the Ford Explorer and Lincoln Aviator, two very important vehicles for The Blue Oval. 2021 Ford F-150 production has similarly been affected by the lack of chips, and the shortage could last for several more months, per Farley’s recent remarks. These latest developments arrive as Ford is still struggling to launch the Ford Bronco, which will see even more delays, as suppliers continue to be impacted by the pandemic.
Ford has taken major steps to steer through the COVID-19 pandemic. Until recently, the automaker’s actions had 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. But with the winding down of manufacturing facilities in Brazil, the company has demonstrated that nothing is off the table when it comes to getting the company back to a more sustainable financial footing.
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. Additionally, Ford has developed a transparent N95 face mask that promises to greatly help the hearing-impaired. The Blue Oval also remains committed to producing PPE until they’re no longer needed. In April, the company partnered with the United Auto Workers to off on-site vaccines for employees at select facilities.
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.
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.
Ford announced even more changes to its executive ranks in late April of 2020. 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.”
It will be interesting to see how Ford stock will perform in 2021, especially in light of various actions taken by the Dearborn-based automaker 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 and F-150 Electric.
“The 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 earlier than The Blue Oval.
Ford’s first dedicated EV is the new Mustang Mach-E – a 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.
Production of the Mach-E kicked off in late October 2020, and the very first units of the all-new Ford Mustang Mach-E have started to arrive at U.S. dealers. Ford delivered its first three examples in December 2020 and 6,614 units in Q1 2021. The first batch of units have also already reached Europe. Automotive outlets have generally praised the EV for its good looks, engaging driving dynamics, and upscale interior and preliminary reports suggest that the vehicle is already eating into Tesla’s market share, which would be a significant achievement, especially when considering the relatively short amount of time the Mach-E has been on the market.
The 2021 Mustang Mach-E represents one part of a three-sided trident Ford hopes will increase its North American market share this year and beyond. The other products on this figurative spearhead are the 2021 Ford F-150 and the Bronco family of vehicles, which includes the 2021 Ford Bronco and the 2021 Ford Bronco Sport. With three of the four vehicles currently in the earliest stages of their respective rollouts, it will be some time before their effects are well known. That said, all models have a significant amount of potential to resonate with car shoppers, and their reception will almost certainly impact the value of Ford stock in the coming months, provided the company can build a steady supply of them.