Ford’s 20% Sales Forecasts Meets A 38% Stock Collapse
Jim Farley keeps pitching bold growth targets for Ford while Wall Street responds by punishing the stock harder than almost any major automaker. Something in his vision and the reality of the market is not adding up.
Ford (NASDAQ: F | F Price Prediction) CEO Jim Farley has been extremely optimistic about the No. 2 US car company’s prospects. Recently, he said Ford’s Fathom EV pickup would sell 100,000 units in its first year of production. That ignored stiffening competition as legacy car companies, beaten back by poor sales, have slowly reentered the US market, which he also abandoned. Add Tesla (NASDAQ: TSLA) to the mix. US EV sales are down 30% in the first nine months of this year. Car sales in the US are generally flat. The average age of a car on the road in the US is 12 years. The average new car price is $51,000.
Farley told many of his workers that his goal was to raise Ford’s unit sales by 20% by 2032. The WSJ reported, “The company’s global strategy turns on Farley’s emphasis on no longer making “boring” vehicles, which for now has left it without the budget-friendly small sedans and SUVs it used to give priority to.” However, other car companies are likely to abandon their “boring” models as well.
Wall St. has had enough of Ford’s sales and forecast, driving the stock down 38% in the last five years. The S&P is up 61% over the same period.
It is hard to say how Farley will reach his target. His market share in the US ranks third. Ahead are the world’s largest car company, Toyota (NYSE: TM), and Detroit crosstown rival GM (NYSE: GM). And Ford’s sales in the US are falling. It has far from modest sales in China and the EU. It is stuck in America.
As has been said over and over again, Ford is a big SUV and pickup company, which has served it very well in its home market. Americans continue to buy cars with relatively low mileage, but it’s hard to say whether that will continue with high gas prices.
Farley has also said a good deal about his anxiety if Chinese EVs move into the US market. If they build those cars here, these EVs may have a chance to sell in America. Car companies beyond Ford would have significant sales problems as well.
Farley may want to stick to producing and making cars. His track record with forecasts is poor.
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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.
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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.
