Today we're going to talk about one of the Big three in the United States--$Ford Motor (F.US) $。

When it comes to Ford, you may first think of its brands: Ford (Ford), Lincoln (Lincoln) and Aston. Martin (Aston Martin), Mazda (Mazda), Mercury (mercury).

In addition, Ford also owns the world's largest auto credit company-Ford Credit (Ford Credit), the world's largest car rental company-Hertz (Hertz) and the car service brand (Quality Care).

There is no doubt that Ford's greatest innovation was to create an assembly line production model.

In 1908, the five-year-old Ford produced the world's first car belonging to ordinary people-the Model T. In 1913, Ford developed the world's first assembly line, creating a world record that has not yet been broken.

The flow production mode greatly improves the automobile production efficiency, reduces the production cost, improves the labor relations, and reduces the car price at the same time, which makes the automobile become a popular means of transportation. It can be said that Ford has played an important role in promoting the popularity of cars and the development of the whole automobile industry, and even affected the way of life of all mankind. Its founder, Henry Ford, is therefore called "the man who puts wheels on the world".

From the stock price point of view, Ford Motor in the bull stock Yunji Inc's U. S. stock performance is not outstanding, nor out of the beautiful 45-degree upward trend. ButFord surged nearly 140% last year, surpassing$Tesla, Inc. (TSLA.US) $Many new car-building forces have become the best-performing stocks in the automobile industry in 2021, which once started the counterattack of traditional car companies.

Unfortunately, Ford failed to hold steady this year.After climbing to an all-time high of $25.56 a share in January this year, the share price began to move down. by the close of trading on May 24, it had fallen 51% from its peak and nearly 40% since the beginning of the year.What happened to Ford during that time? When will the company's stock price reach an inflection point?

Raw material costs rise, profits are under pressure

So far this year, Ford, like other automakers, continues to bear the pressure of chip shortages and rising raw material costs.

Ford's revenue in the first quarter was $34.5 billion, down 4.7 per cent from a year earlier, while operating profit was $2.7 billion, down 34 per cent from a year earlier.

Car sales have also seen double-digit declines. Ford's total sales in the first quarter of this year were 432132, down 17.1% from a year earlier; sales in the Chinese market were 125000 in the first quarter, down 18.8% from a year earlier.

Ford maintains its financial forecast for the full year. Ford's chief financial officer, John Lawler, said: "Thanks to strong demand for existing and new models and healthy pricing, the company maintained its adjusted EBIT forecast for 2022 at between $11.5 billion and $12.5 billion. Adjusted free cash flow is expected to reach $5.5 billion to $6.5 billion.」

But analysts still have concerns. Recently, Wells Fargo & Co downgraded Ford Motor and$General Motors Co (GM.US) $Analysts believe that both companies have passed on most of the cost increases to consumers, and such a profit situation cannot be sustained.

The bank believes that the attractiveness of carmakers' electric vehicles will be undermined by raw material costs and macroeconomic factors. Colin Langan, a senior equity analyst at the bank, wrote in a report to clients: "The market may have underestimated the durability of the recent rise in raw material prices and did not take into account the impact of recent aggressive fuel regulations in the United States.As a result of these two factors, Ford and General Motors Co will be forced to sell pure electric vehicles that meet CAFE standards, regardless of profitability. "

Profit is Rivian, loss is Rivian.

As$Rivian Automotive (RIVN.US) $Ford Motor, one of the top five shareholders of Rivian, continuously sold Rivian shares after the end of the Rivian lock-up period, which also attracted the attention of the market.

When Rivian went public in November last year, its share price soared 53% on its first day, and its market capitalization exceeded $100 billion, making it the largest IPO in the United States since Facebook Inc in 2012, and even known as the "Tesla, Inc. killer." Ford also makes a lot of money from Rivian's IPO, which contributed nearly $8.2 billion in investment income to Ford in the fourth quarter of last year.

However, with the Federal Reserve raising interest rates leading to the bursting of the "bubble" of high-cap stocks, and Rivian itself in production difficulties, Rivian shares began to fall, Ford naturally suffered huge financial losses. Ford had first-quarter revenue of $34.5 billion and adjusted profit before interest and tax of $2.3 billion, butThe sharp decline in Rivian's share price led to an overall net loss of $3.1 billion for the quarter.。

In addition, Ford's investment in Rivian did not achieve the initial goal of accelerating the electric transformation, so after the end of the lock-up period after IPO, it began to reduce its holdings of Rivian, reducing a total of 150 million shares twice. at present, Ford still holds about 86.94 million shares of Rivian.

Industry insiders said that Ford's current focus is on the electric transformation, but at present, the global economy continues to decline, and Ford is facing various pressures such as operating losses, shortage of parts and components, suspension of production, and so on. Under such circumstances, it is safer to sell Rivian shares.

Promote the transformation of electrification

What Ford is still doing is to accelerate the transformation of electrification.One of the reasons why Ford's share price soared last year was that the market approved the electrification transformation plan of the new CEO Jim Farley.

Farley promised to be more open and transparent to investors and launched a "Ford plus" restructuring plan that revamped the management team of the established carmaker while shifting more resources to building electric cars, including Mustang Mach-E SUV and Fmai 150 Lightning electric pickups.

Ford's biggest one-day gain last year came on December 10, 2021, when Farley confirmed on social media that Ford would triple production of its electric car Mustang Mach-E in North America and Europe to more than 200000 vehicles a year by 2023.

According to Ford's plan, it will invest $50 billion to develop and expand its electric vehicle production over the next four years.It is expected that by 2026, the company's adjusted EBIT profit margin will reach 10%, and the annual production of electric vehicles will exceed 2 million. The goal is that by 2030, global electric vehicle production will account for 40% of the company's total production.。

To this end, Ford announced in March this year the establishment of an independently operated automotive business unit to identify and assign operational priorities.

Ivan Feinseth, an analyst at Tigress, thinksAfter falling 40% so far this year, Ford now looks particularly attractive.. In his view, "the recent price correction has created a compelling entry point and value, because after the recently announced production transformation, it began to increase the production of electric vehicles, forming two different manufacturing business units. It highlights the production success and unleashed value of electric vehicles. "

Analysts say Ford's F-series trucks and SUV models are in high demand, while the company is pushing ahead with the production of its electric vehicle products, including Mustang Mach-E, E-Transit and Fmure 150 Lightning electric pickups. Among them, the Fmur150 Lightning went into production on April 26th, giving Ford a lead over several other competitors to enter the electric pickup market, and production in 2022 has been sold out.

Feinseth also said Ford's strong balance sheet and cash flow would fund its strategic initiatives and long-term growth strategy. "Ford's ongoing introduction of new products, coupled with international expansion and a long history of returning cash to shareholders, will drive greater long-term shareholder value creation.」

Do you think Ford's share price has fallen to the bottom?

When will there be an inflection point?

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