In light of recent automotive industry news, it would seem that Ford Motor Co (F) is not built as tough as advertised. In the days leading up the automaker’s release of their third-quarter results, Ford’s (F) stock dropped 1.5% to a nine-year low, trading at just above $8 per share. As limited-edition Trump tariffs and trade tensions with China increase, Ford seems to be up a certain type of creek without a paddle.
The American automaker does business in hundreds of countries around the world, but the U.S., China, and the 20 countries that make up western and central Europe (the “Euro 20”) account for the majority of its sales. Over the course of the last year, Ford’s sales fell nearly 4%, largely in part to the dwindling consumer interest in their sedan offerings.
In April, Ford (F) announced in their quarterly financial report that they will no longer be investing in the next generation of sedans for North America.
“Over the next few years, the Ford (F) Car portfolio in North America will transition to two vehicles — the best-selling Mustang and the all-new Focus Active crossover coming out next year. The company is also exploring new ‘white space’ vehicle salutes that combine the best attributes of cars and utilities, such as higher ride height, space, and versatility.”
–Ford Quarterly Financial Report April 2018
Ford (F) claims that by 2020, 90% of its portfolio in North America will be trucks, SUVs, and commercial vehicles. Honestly, Ford’s (F) discontinuation of their sedan lineup makes total sense. Unless there’s a “My other car is at Hertz Rental” license plate cover, consumer demand for Ford sedans is decreasing. The Ford Taurus has existed long before the dawn of time, and the Fiesta and Focus just don’t have the millennial sex-appeal necessary survive.
Through the month of September, reports indicate that Ford has sold 378,533 cars, down 17.4% from the prior-year-to-date figure. Ford (F) studied these trends and says the appearance of sedans has dropped from 57% in 2010 to roughly 30% at present. Kumar Galhotra, Ford’s group vice president and president of Ford North America gave a statement of obligatory assurance to consumers, saying that Ford isn’t “getting out of passenger cars” but merely “getting out of sedans.”
Ford (F) CEO Jim Hackett held a company dealer meeting in Las Vegas on Thursday, at which time Hackett and other Ford executives shared with attendees their plans for new models of the Explorer and Escape SUVs, as well as the new Ranger mid-sized pickup truck, and an “unnamed smaller off-road utility vehicle” that many believe to be the revival of the Ford Bronco.
“I feel better after seeing the product.”
–Jim Seavitt, owner of Village Ford Dearborn, Michigan
While Hackett tries to comfort the hemming and hawing of Ford dealers around North America, the automotive sector of the market has made their own assumptions of the company. Adam Jonas, an analyst from Morgan Stanley, believes that the automaker is “suffering from a perception among investors that it lacks transparency and is failing to take quick, decisive action in executing a turnaround plan,” according to CNBC. Jonas believes that the market needs significant evidence before embracing “the Ford restructuring story.”
The “restructuring story” that Jonas touched on is based on Ford’s recent announcement of an $11 billion plan to rebrand the company, including the aforementioned plan to discontinue its North American distribution of sedans.
Jonas, on behalf of Morgan Stanley, downgraded Ford Motor Co from overweight, their version of a buy rating, to equal weight. He then lowered his 12- to 18-month price target from $14 to $10 a share.
“We had hopes that Ford (F) management would move the other way with transparency and increase engagement with investors on a long-term strategy in a more proactive way,” says Jonas, but unfortunately this is not the case.
As for the Future of Ford Motor Co (F), the company will need to produce results for investors that show they are being proactive and working towards tangible goals.
Ford (F) has existed for the last one-hundred years by creating the vehicular embodiment of the American dream. Let’s just hope this can continue.
As Tesla (TSLA) Stock Price Consolidates, What Should You Watch?
In the past few weeks, Tesla Inc. (NASDAQ:TSLA) stock price has been making headlines for various reasons. Currently, the electric vehicle maker is making headlines after its decision to reintroduce unlimited supercharging for owners of the Model S sedan and Model X cars.
Unlimited free supercharging for Model S and Model X
This is not the first time the company is offering free supercharging benefits and this shouldn’t be a big deal. However, for investors who are reading between the lines, this can be unsettling for Tesla stock price. Investors are still not sure what motivated the decision to bring back the free supercharging for life hardly a year after it was phased out.
[Special Report] On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market
It is expensive for the company to power cars of customers for life when it has been facing unprofitability issues. The company has been laying off employees and cutting costs to show that it can be profitable in the long-term. Following the announcement of Q2 earnings Tesla stock dipped 10% after the company announced a net loss of around $408 that was almost three times what Wall Street analysts had predicted on a per-share basis.
Free supercharge for life to boost sales of Model S and Model X cars
The return of free charging is a desperate move by Tesla as it looks to boost sales of the Model S and Model X vehicles. For months bears have argued that the low-margin Model 3 car is the reason there is low demand for these premium profitable models.
For instance, in Q2 Model X sales were down 40% while Model S registrations dropped 54% in California which by far is Tesla’s biggest market. On the other hand Model 3 sales doubled in the quarter. Although this might look like good news for the company it is nonetheless not if the low margin Model 3 is eating into the demand for higher-margin models.
If the company at some point phased out free supercharging then it will be pulling forthcoming sales forward. That with disappearing tax credits may help in creating a future demand vacuum for Model X and Model S vehicles.
Auto Stock Prices In Jeopardy After Latest Earnings Reports From Ford & Tesla
After disappointing earnings, both Ford stock price and Tesla stock price fall
The automobile industry has been through its fair share of troubles over the past few years, due to a range of factors. However, it cannot be denied that one company that has been going through a prolonged churn is Ford, one of the giants of the industry.
On the other hand, electric car manufacturing giant Tesla has had a rollercoaster ride for years now. That continues to be the case for the company. This week, both these companies released their Q2 2019 earnings and the results proved to be disappointing.
Ford Stock Price
Ford Motor Company (NYSE:F) released its earnings on Thursday. Unfortunately, the results proved to be a major disappointment for investors. In addition to that, the company’s projections for the full year also proved to be well short of expectations.
Back in April, the shares had attained the biggest gains in a decade after the carmaker beat expectations, but the second-quarter results have dented the stock considerably. The Ford stock price declined by as much as 7.45% following the results, which is the biggest single-day fall since January 17 and the next few days could prove to be crucial.
On the other hand, the earnings for the full year were projected to be in the range of $1.20 and $1.35 a share. Analysts had expected earnings of $1.40 a share.
Tesla Stock Price
On the other hand, electric car maker Tesla Inc (NASDAQ:TSLA) may have generated record deliveries. But the company’s losses widened and the resignation of co-founder J. B. Straubel didn’t help matters either. However, one of the bigger reasons behind the Tesla stock price tanking by as much as 14% on Thursday was the fact that CEO Elon Musk seemed to backpedal on his promise about turning a profit in the remaining quarters this year.
Although Musk did reiterate the company’s quest to turn a profit in the next two quarters, he seemed to stress more on the growth of volumes and enhancement of production capacity. Analysts believe the company needs to increase its margins if it wants to become a serious player in the industry.
Tesla Stock Price Makes Smart Recovery; Production, Sales Jump
Tesla stock price has made a recovery, no matter how brief it may be. New light on the company’s production could be a key factor in recent moves for TSLA stock
Tesla Inc (NASDAQ:TSLA) may have had a highly disappointing start to 2019 when it reported shrinking deliveries. Naturally, Tesla stock price dove as well. However, in its latest quarter, the electric car manufacturing generated record-breaking delivery figures. All of a sudden it became a far more attractive proposition for investors.
Key Drivers For Tesla Stock Price
In addition to better delivery data, there are many other factors generating interest on Tesla stock price. It has emerged that Tesla plans to consolidate its position as the leader of the electric car manufacturing industry. The company is ramping up hiring. It is trying to take its production capabilities to higher levels in the coming quarters.
It is important to note that optimism around TSLA stock has been bullish since June. Thus far it has rallied by as much as 35% during the period. The news about the hiring spree from Tesla came after a leaked e-mail. The e-mail mentioned Tesla will hire more workers to ramp up production at its Freemont, California plant.
The push towards higher production started from the record-breaking performance from Tesla in its latest quarter. In addition to that, the presence of the factory in Shanghai will also allow the company to raise production capabilities. It could also help Tesla reach its annual target of 400,00 deliveries.
Earnings Forecast For Tesla
Analysts estimate that the loss per share for 2019 will be $1.68, which is lower than the previous estimate of $1.79. On top of that, analysts have also estimated that Tesla is going to have $5.05 worth of profits per share next year. That is definitely a significant argument in favor of Tesla stock. That being said, other factors like subsidies and geopolitical factors could impact the stock. Investors should be careful about those risks as well.
Search Stock Price (StockPrice.com)
Sponsored Content2 months ago
Special Delivery! On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market
Featured5 months ago
Multi-Trillion Dollar Industry Providing Massive Opportunity in 2019 & Beyond
Cannabis4 months ago
Two Massive Growth Industries, One Choice for Investors
Biotechnology3 months ago
Big Investments Are Signaling The Green Light For A ‘Hot Market’ With Cancer-Fighting Stocks
Featured2 months ago
This New Technology Could Transform A Multi-Billion-Dollar Industry!
Cannabis3 months ago
A New Cannabis Trend That The Market Should Take Immediate Notice Of Is Here!
Biotechnology1 month ago
PharmaCyte Biotech (PMCB) and UTS Creating Advanced Version of Melligen Cells to Treat Diabetes
Biotechnology2 months ago
The Future Of Drug Delivery Has Biotech Investors Focusing On One Small Company