Ford Shares Surge Ahead of Rival

Good news beat out bad news for Ford Motor Co. (NYSE: F) over the past several weeks. Shares of Ford are up by 31%, while General Motors shares have moved higher by only 14%. In a choppy market, Ford’s performance is noteworthy.

The primary headwind for Ford was an article in The Wall Street Journal that brutally attacked Ford’s quality record. This was highlighted by recall and warranty data. It also reviewed what Ford has done to address the problem and that no short-term solution is available.

On the positive side, Ford posted extraordinary July sales. U.S. sales rose 36.6% to 163,492. Most other car companies had trouble improving sales last month.

Investors continue to be willing to believe, in great numbers, that Ford will be a winner in the electric vehicle (EV) market. The Ford F-150 has been the best-selling vehicle in America for four decades. The new F-150 Lightning has a ready market of millions of current F-150 owners. Ford management has made a gamble that many of these will roll into an electric version. (Though, Ford has just increased its price, which could undermine sales.) Notably, GM does not have an installed base of any one single vehicle that is close to comparable.

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The theory that Ford will do well in the EV market was given support when electric car subscriber company Autonomy said it would order 1,800 Fords. That puts it behind only Tesla, GM and Volkswagen in terms of units ordered. These cars will not be in the market immediately. According to Bloomberg, “Some deliveries won’t begin until the fourth quarter or early 2023, according to Scott Painter, Autonomy’s founder and chief executive officer.”

Ford’s shares still have a long way to climb to return to their recent high. Shares trade at $15.21, against a 52-week high of $25.87.

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