Ford's Stock Gain Favor

Investors in Ford’s shares have been on a wild roller coaster over the last two years. Current CEO Jim Farley has been on the ride through all of it. Some of the share price increase late last year may have been because of optimism about his tenure. That did not last. The reality of car industry problems and the mad rush of all manufacturers to become EV leaders pulled shares down sharply. Year to date, they have fallen about 25% despite growth in U.S. unit sales.

Ford’s shares have gained an odd sort of favor. According to the new “Robinhood Investor Index,” Ford is among the five most popular holdings across its customer base. The index tracks its 100 most popular stocks. Robinhood has 22 million funded accounts. The Wall Street Journal’s editors believe one reason for the disclosure of the popular stocks is to show that Robinhood’s customers are not a crazy group or people who put all of their money into volatile penny stocks. It is true. The five most popular stocks in the index are Amazon, Tesla, Apple, Ford, and AMC. Only AMC falls into the category of stocks bought by unstable people.

Ford’s place in the index does not seem to make sense at first. Amazon, Tesla, and Apple are part of the small club of mega cap tech companies. Each has come into its own as a public corporation in the last few decades. In Tesla’s case, the period is even shorter. Each of the three has market capitalizations measured by a trillion dollars, more or less. Ford’s is barely $62 billion, which is well below 10% of Tesla’s.

Ford, founded in 1903, is the only company included by Robinhood that bridges an almost ancient part of the U.S. economy with its tech heavy present. Its gas powered engines are almost all Americans have known as a type of car and light truck transportation. For nearly all of the time Ford has been in business, vehicles did not have computers, anti-lock brakes, sophisticated safety systems, or GPS powered navigation. Drivers had to use maps.

Ford now finds itself in a battle for which it was ill prepared. Experts expect most Americans will have an EV in the next decade or two – depending on who is forecasting. Ford plans to have an all electric fleet on a timetable that will allow it to participate in this evolution. Car companies have decided to disregard the fact that not everyone will want an electric powered vehicle.

Ford, for a time, was a potential challenger to market leader Tesla, particularly in the pick-up market that dominates U.S. vehicles purchases. Its F-150 pickup has been the most popular car in America for four decades. The new Ford-150 Lightning EV could draw on a customer base that is well into the millions. However, just as the new truck launched, high component costs made Ford raise prices on the EV pick ups by average of $7,000 per model. Without a question, that will dent demand.

Ford knew the EV future would be expensive, and that fact was just driven home by the F-150 price challenge. Ford may be among Robinhood’s favorite stocks because its wild ride and the story behind it are too hard to resist.

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