Key Points

• Ford’s stock has stumbled, and possible dividend cuts could intensify its position.
• Rivalry from Chinese EVs and trouble in China put an additional burden on Ford.
• Dividend cuts may guide to a remarkable stock drop, presenting a shorting chance.
• Answer your biggest retirement questions today!

Watch the Video

Edited Video Transcript:

Jim Farley, the current CEO of Ford (NYSE: F), got his job in October.

You mean the cousin of Chris Farley, the deceased actor?

They apparently are related.

They are.

What’s happened is, you know, if Ford sells down, not very much, like a couple of bucks, the stock is going to be back to where it was when he became the CEO.

Now, it is absolutely humiliating.

Ford continues to humiliate itself.

I don’t even know how they can look themselves in the mirror.

This guy may have been there for that length of period of time.

And basically, the shareholders, except for a dividend, which is because the Ford family, I think, needs the money.

It’s awful.

It’s awful.

I think one thing that Ford shareholders should be a little bit concerned about, and especially considering how things are going with their EV structure, there’s an outside chance that they may start to get nudged to cut that dividend.

Yeah, you’re absolutely right.

It’s a sweet dividend now.

We’ve talked about it.

Yeah.

If they cut the dividend, they’ll cut the stock in half.

Yeah.

And here, if you’re Ford, the noose is tightening on you.

There was a time when if you were a European or American car company, China was a slot machine.

You went over there, you had to do a JV with the Chinese company.

That was part of the rules.

But it was sweet because, you know, China, ten years ago, went from being the second largest car market in the world to the first largest.

Way outgrew the United States.

So I’ve got one of these JVs in China and I’m saying, wow, this is the greatest.

GM now apparently is thinking of just exiting that market completely, just walking away from what was one of the best deals they ever had.

Ford may stop making money in China.

They may have problems in the United States with EVs, and that may last for a while.

And then there’s always the specter of the fact that the Chinese are going to get into the United States one way or the other with these twelve thousand dollar EVs.

It’s going to happen.

They’ve got tariffs up.

I know now it’s one hundred percent.

Maybe they’ll make them in Mexico and use NAFTA to get them across the border.

But I’m telling you right now, Ford is besieged on all sides.

Yeah, and there’s not really there’s not a lot of ways out of this.

But again, this hit me when I was I was writing a story for twenty four seven Wall Street and I was putting Ford in there.

But I had a little caveat to the reader.

It was like if things go south, they may have to cut the dividend because there’s a lot of outstanding shares.

You know, it’s a big float for Ford.

It’s in every quarter.

Well, like you said, the Ford family probably is a big fan of that dividend.

It’s going to weigh on earnings.

And at this juncture, even if they cut it, if they cut it, still going to yield two and a half, two seventy five.

And for a lot of people, I guess they would be OK with that.

But a lot of people will just absolutely flush the stock if they cut it that much.

Well, so I’ve got two takeaways here.

Number one, it doesn’t matter who runs Ford.

Farley, I think, makes about twenty million dollars a year.

Let him have it.

He’s a car enthusiast.

Sure.

You know, let him let him keep the job.

Nobody else is going to.

The Ford family has proven they’re awful at choosing CEOs.

So he gets to keep his job.

Number one.

Number two.

I would look at shorting this stock for the reason you’re talking about.

And that is if they cut that dividend, it’s going to be like the elevator drop, twenty stories.

Yeah, it won’t be good.

It won’t be good.

And as we’ve seen with other companies, sometimes you can fight your way out of it.

I mean, AT&T (NYSE: T) had to slash their dividend, but the stock got hit so hard that it’s still above five percent, you know, and it’s gone basically sideways for a year.

And, well, they survived, you know, the Eighteen Tails survived because they, you know, they finally got rid of DirecTV and they’ve gotten rid of some things that are making their own.

Warner, they got rid of Warner Media and, you know, the box over at Discovery got it.

And it sank their ship and the ship went to the bottom of the ocean.

With all the other issues.

I’m not a big, you know, although I rank them somewhat higher than Stellantis, but not a lot.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.