Ford’s Stock Is Too Expensive

By Douglas A. McIntyre Published Jul 20, 8:06AM EDT

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Ford’s Stock Is Too Expensive — © Ford Dealership (BY 2.0) by JeepersMedia

CNBC says Ford (NYSE: F | F Price Prediction) was among the S&P’s most “overbought” stocks this week. That means the shares have risen too fast to be justified by the company’s financial fundamentals and will likely sell off soon.

Ford’s shares have done well recently. They have been up 24% in the last six months, compared to a rise of only 14% in the broader market. And the news may not justify that. It has been mixed. Management said it would convert a Canadian plant from EV manufacturing to making its Super Duty trucks. The move is an admission that Ford has gone too far in its EV investment. However, its pickups are hugely profitable. This profitable move could have been enough to move the stock.

But why the “overbought” designation? Perhaps it’s because of upcoming earnings or Ford’s confusing long-term plans. The earnings will likely show steady revenue and EPS, but Ford continues to post huge losses in its EV unit.

Another nagging question is whether Ford’s EV investment was made too soon, pegged as high as $30 billion. Ford has a large capacity to build EVs, which were expensive to create, and there is little evidence that the money spent was spent wisely.

Ford’s early move into EVs involved using its famous Mustang sports car brand to launch an EV crossover and its famous pickup brand F-150 to launch an EV version called Lightning. “Overbought” signals that Ford’s management’s investment has exceeded its sales possibilities. The F-150 is one of the best-selling vehicles in history.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.