Should Ford Follow Tesla and Go Private?

By Douglas A. McIntyre Updated Jan 11, 7:44PM EST · Published Aug 8, 6:35AM EDT

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Should Ford Follow Tesla and Go Private? — © courtesy of Ford Motor Co.

Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk said he may take his company private. Tesla has very modest sales and is not profitable. Ford Motor Co. (NYSE: F) is large, profitable and suffering from investor exhaustion, as many of its plans falter. And it is controlled by a single family. The Ford family might want to take Ford private and dispense with a number of headaches.

Musk’s plan is elaborate and would value the company at an extraordinary $70 billion. In the most recent quarter, Tesla’s revenue was $3.4 billion, but it lost $742 million. In Ford’s most recent quarter, it had $38.9 billion in revenue and net income of $1.1 billion. Its car business has long-term debt of $12.5 billion. A complicating factor is that Ford Motor Credit has long-term debt of $89.5 billion. However, most of that is secured, and the division had earnings before tax of $645 million.

The Ford family has control of the company’s voting shares, so the decision to go private rests with them. They have watched the stock take a beating over the past two years, down 18% while the S&P 500 is higher by 31%. Ford’s market cap has dropped to $41 billion.

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The Ford family can assume that the company’s financials will not turn around soon. It has struggled in the United States and discontinued several of its car models. Financial results in China, the world’s largest car market, are dreadful. Ford’s plans to tackle the future of electronic and autonomous vehicles have engendered a great deal of skepticism. CEO James Patrick “Jim” Hackett is less than widely regarded on Wall Street, in part because he has been so vague about Ford’s future. Ford could stop its revolving door of CEOs and put Executive Chair William Clay Ford Jr. into the top spot, which is effectively the job he already has.

Can Ford go private? It would need an army of investment bankers and lawyers to advise it and then to raise tens of billions of dollars. Musk’s idea has to give the Ford family the opportunity to review whether being public is to its advantage.

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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.