NYSE:F is set to deliver their second quarter earnings call on July 30th this week, and there has not been this much hype about Ford’s performance in years. All of the buzz surrounds their next generation lineup of cars which, surprise surprise, has an electric vehicle flair to it. Earlier this month, Ford announced the return of the iconic Bronco and while this was supposed to be the highlight for the company at the Detroit Auto Show, because of the Covid-19 pandemic this unveiling had to occur online. The early reviews of the Bronco are positive, and the presale for the First Edition sold out online within hours. But the Bronco isn’t the only new addition to Ford’s lineup.
Despite global economic volatility in the stock markets, one of the consistent sectors that has been skyrocketing through the pandemic has been electric vehicles. The NASDAQ reached all time highs in July, thanks in large part to the runaway freight train stock price of Tesla (NASDAQ:TSLA). Benefiting from these all time highs has been other smaller players in the electric vehicle industry including Chinese automaker Nio (NASDAQ:NIO), Ayro (NASDAQ:AYRO), Workhorse Group (NASDAQ:WKHS) and Tortoise (NASDAQ:SHLL). The electric vehicle industry’s performance has been often compared to the dotcom bubble and investors have been bracing themselves for a major correction. Ford has thrown their hat into the mix with the announcement of the Mustang Mach-E, both car and SUV versions coming in 2021 and the F-150 Electric version slated for release in 2022.
The second quarter for car companies was not much better than the first quarter during the heart of the pandemic. Major declines in sales as people have had little reasons to leave their houses, combined with closures of factories have crippled the auto industry for a bulk of 2020. The Zack’s Consensus Estimates see a loss of $1.27 per share or just under $15 billion in revenue, down year over year from quarter two in 2019 when the company posted earnings of $0.32 per share. The second quarter is expected to have hit Ford with an operating loss of $5 billion, with lower year over year sales in North America and Europe, but higher sales in China. Moreover, Ford is expected to report a 68% decline in North American revenues as well since 2019.
Ford’s stock price may look enticing to bargain bin investors but it remains unclear how the markets will react. On one hand, the sales and numbers are disappointing, especially in North America. Growth in China is encouraging as it may be a sign of things to come for a country that has put the Covid-19 virus somewhat behind them. If Ford announces that they will be reinstating their quarterly dividend, it could entice investors to take a shot on the American company, especially given the new additions they have to their lineup as well as their investment into electric vehicles. With all of these new announcements, Ford is hoping to bank on investor optimism for the future, rather than focussing on the sales decline during the pandemic. Currently at nearly a 30% discount from their 52-week highs, Ford’s stock could be a bargain moving into the next generation for the automotive industry.
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