Stock price is a pretty serious thing for a large corporation like Ford.
This stock price is a good estimate of where the company is, especially in comparison to their former self as well as their competitors both globally and within the US car market.
Ford is one of the most recognized car manufacturers and brands across the world, likely being considered one of the most recognizable brands among any market.
Yet, Ford has a stock price that is much lower than you would expect for such a company.
For comparison, while GM has around double the stock price of Ford, which already seems out of tune, Tesla’s stock price is almost 20 times higher than Ford’s right now.
There are many reasons why Ford’s stock is so low, although there is no official answer.
We have run through some of the most likely reasons why Ford’s stock is so low in comparison to its competitors. Read on to learn more.
The Emerging Electric Car Industry
Tesla’s stock, while supported by the multiple businesses this name subsumes, which is more than just cars, is crazy high in comparison to Ford, and GM.
This is, again, for a plethora of reasons only Musk will have the real answer to why their stock is so high.
But more importantly, the electric car market, which Tesla is the arrowhead of, while only forming part of the Tesla corporation, is booming.
In other words, more people are buying Tesla’s electric cars than ever before.
As mentioned, Tesla’s stock isn’t the best to compare to Ford as it is made up of more than simply car sales.
Yet, Ford, who are mainly made up from car sales, still has an extremely low stock even in comparison.
Although, sales aren’t all of it.
While Ford will still trump Tesla in terms of sales, Tesla certainly grabs the attention of investors much more than the downward trajectory of the motor car market.
Undoubtedly, the booming nature of electric car sales is going to affect Ford’s stock, so this in conjunction with other reasons, can explain why the stock may be so low.
It is unclear how much this may affect stock, but it can certainly pile up along with other reasons why Ford’s stock may be so low.
Ford is pretty heavily affiliated with the right wing politics in America.
They pretty openly supported Trump within the 2020 presidential election and also quite openly donated to the Republican Party.
While this may keep the loyal customers, it can certainly ward away the younger liberals of America, many of whom form the main market of car buyers.
Moreover, this market of younger car buyers will more likely be drawn to the environmentally safe electric cars.
Predictions And Loans
A clever move by Ford back in the early to mid noughties may lead to an ill fated downward spiral.
Ford was pretty clever to read the signs in 2007/8 of an imminent economic crash.
They quite accurately predicted the market crash and following suit decided to loan billions upon billions in order to fend off economic downturn in their company.
They borrowed this money against their holding company’s recommendations.
While this worked on one level Ford maybe didn’t predict how far they could bounce back.
Obviously, having borrowed so much, they will need to pay it back and are likely still paying it back now and for years to come.
This clever prediction and subsequent loaning probably would have been fine but it seems that Ford’s tea leaves didn’t show them the full story.
The economy, nor Ford’s sales, really bounced back in the way they predicted.
So their long term plans for paying back and then bouncing back didn’t happen as they imagined.
Moreover, they clearly didn’t see Elon Musk in the rearview mirror.
In the period where Ford probably would have bounced back, Tesla emerged as a serious interest for investors and a serious competition for motor cars generally, as well as the now weakened Ford stock.
Undoubtedly, what no one of us could have predicted, the global COVID-19 pandemic would have also seriously tanked their stocks as it did to everyone, but Ford remained in a much worse position than other companies thanks to their debt.
Investor Stock Predictions Working Against Them
While Ford originally was quite clever to predict the market crash in America other investors’ predictions end up working against them.
Considering that earnings and unit sales are down by a far margin in comparison to their boom periods, global sales outside the US, especially in China, as well as the change in preferences of American car buyers, have all caused Ford to become an unsightly stock to invest in.
Moreover, Ford has recently moved away from making sedans such as the Taurus and Fusion, while continuing to sell the Mustang, instead choosing to sell crossovers and trucks.
This again has added to their spiraling stock as people look for environmentally friendly alternatives.
With all these things considered, there is a pretty strong case why Ford’s stock is rolling downwards.
Ford simply isn’t a stock with a good outlook and once this happens stocks will plummet, usually.
In Ford’s case they still remain one of the pillars of American society as well as one of the biggest names within the motor car industry so they will never plummet as far as they potentially could.
Ford certainly needs a few quarters to really turn their stock around, who knows, maybe their own predictions and loaning may work in their favor in the long run, but right now it is hard to say.
Ford probably needs to increase sales in China to try to turn the tide against Elon whose cars are at the forefront of technology and seem to be developed every day.
But ultimately, with the emergence of electric cars, in amalgamation with other factors, the trajectory seems to only go down for Ford and investors seem to remain disinterested.