Based on comments by Ford management, their stock should be plummeting. The CEO, Jim Farley, made inaccurate remarks about the company facing bankruptcy and accused the UAW of holding a labor contract hostage, referring to negotiations over pay and benefits. The union is simply employing standard negotiation strategies.
Despite an uncertain financial future, Ford’s shares traded at $12.43, almost 10% above where they traded a year ago. The stock also carries a nifty 4.8% yield.
Experts remain optimistic about Ford’s future due to the ongoing rise in new car prices, resulting in historically high profit margins. The sales of its flagship F-150 full-sized pickup, constituting a significant portion of Ford’s annual vehicle sales in the US, continue to be strong. Despite challenges, Ford is still viewed favorably by investors as a potential victor in the electric vehicle market.
People who know enough about the car industry anticipate a near-future scenario where the US faces a vehicle shortage due to essential plants being closed by the UAW. Similar to the initial stages of the COVID-19 pandemic, disrupted supply chains led to reduced inventory and increased prices, a situation that might repeat itself soon.
Ford’s chance to do well in the EV market is primarily due, in the near term, to its F-150 Lightning, an EV version of its popular pickup. Ford has millions of F-150 owners who are a great set of targets for versions run by an electric engine — this is the good, the bad, and the ugly about owning an D-150.
Investors who have kept Ford’s stock price at a surprisingly high level despite the UAW strike see Ford coming out of it in fine shape.
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