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Ford Motor Company ($F), following its free fall at the start of the COVID-19 pandemic, has proven to be a profitable stock for the remainder of this year. This is mainly due to the third quarter results, which turned out to be more positive than initially thought. The rise continued as several Wall Street analysts forecast strong gains and bet their money on a further rise to $9 per share by the end of 2020.
What do the figures show so far in 2020?
Where at the end of March the stock threatened to fall below $4, it appears to double its value almost three quarters later. Ford often gives the impression of a solid and down-to-earth automotive corporation, which has resulted in decades of producing and supplying cars to a large global audience. This reputation has proved to be essential during uncertain times.
Still, it has been a tough year for one of the largest car manufacturers in the United States. For example in 2020 the company will see a decrease in car sales, production and stock. Meanwhile, statistics on the car credit markets seem to be improving, with Ford appearing to be one of the brands on the right side of the line. With a new stock and production, the brand must help itself to recover in 2021. Ford has already taken a big step in the right direction by publishing adjusted third-quarter results on October 28. The numbers exceeded expectations and were followed by another important statement for shareholders, as the company expects a full year profit.
In the third quarter of 2020, Ford delivered 551,796 vehicles in the United States, which is a decrease of 4.9% year-on-year. However, the main rivals declined from 10% to 11%. Ford’s retail sales fell just by 2%, indicating solid consumer demand.
Today’s statements of CEO Jim Farley about the potential of its EV platforms are therefore very understandable. Ford has confirmed that it does not want the price tags of its electric vehicles to exceed $100,000. Such amounts are inconsistent with the strategy and identity of the car manufacturer. It wants to remain an accessible car brand for a large majority of the population. At the same time, Ford is aware that electric vehicles are more expensive than vehicles with an internal combustion engine, and that a price shift is inevitable.
Ford explores ‘technical’ new roads
With a new production line for 2021, the company appears to have its strategy ready. With the electric Mustang Mach-E, compact sport-SUV named Bronco and the new F-150 pickup model, the sales of next year should turn out to be very favorable. For the latter model, an electric variant will appear on the market by 2022. Electric commercial vehicles are an important target for Ford in the near future. At the moment an electric variant of the popular Transit model is part of the pipeline and a full line-up of other electric commercial vehicles (with possible new models) seems only a matter of time.
Looking ahead, Jim Farley said he expects more than 10% of revenues to come from the sales of electric vehicles. Initially, Ford was much more cautious with its electrification strategy (comparing to General Motors), but this has taken a completely different turn.
Ford made $0.34 per share in the third quarter. At the same time, Credit Suisse maintains a neutral rating and price target of $9 as the share is currently up with 1.05% today, while it seems most likely the share will rise even further up to 2%.
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