Ford Motor Company
On August 16, Ford released on its website a statement of "intent to have a high-volume, fully autonomous SAE level 4-capable vehicle in commercial operation in 2021 in a ride-hailing or ride-sharing service." The oddly specific and incremental proposal attempted to highlight Ford's drive for innovation, technology, safety, and social and environmental stewardship. Ford's executive vice president stated that the company had been developing driverless cars for a decade. Ford also publicized its investments in and collaborations with four Silicon Valley firms, including light sensor firm Velodyne, computer vision and machine learning company SAIPS, machine vision company Nirenberg Neuroscience, and high tech firm Civil Maps. With the press release, Ford showed the public that it is still fighting to stay at the cutting edge of mobility technology, even as giant competitors like Tesla
The Wall Street Journal published "Ford Developing Fully Driverless Car," an article summarizing Ford's announcement. It was largely positive, portraying the plan as a tactical move in a technological arms race within the automobile industry. But Business Insider's "Why Ford's driverless car plan is a little sad" struck a more neutral tone, warning that Ford's prototype seemed boring. The article noted that the advent of autonomous cars would largely destroy the symbol of the car as freedom and enjoyment.
Ford's news should be good news to consumers who have exciting auto technology to anticipate. But how should Ford's investors feel? The recent relationship between Ford and Wall Street has been rocky. Ford's stock price currently sits at $12.50, a massive 21 percent decrease from its 52-week high of $15.84. Ford has not performed so badly to warrant such punishment. Yes, its last quarterly earnings missed estimates by 8 cents and gave cautious guidance, but Ford stock plunged as much as 10 percent after the July earnings report. Conversely, when Ford reported the highest pre-tax income ever in 2016's first quarter and provided reassuring guidance, investors only bought enough to push the price above $14. Then investors eased and sold, pulling the price back toward $13. Even while the S&P recently broke new records, Ford stock stagnated. So it seems that Ford's 2016 Wall Street relationship has been punishment in bad times and indifference in good times--an unpromising investment.
Ford is doing well in terms of technological innovation and shareholder support. Ford has slowly but steadily raised its dividend since 2012. Now the yield is a whopping 4.8 percent, and the price to earnings merely less than 6. On the other hand, Ford's August sales just fell compared to last year's and previous months'. It seems the story of Ford stock is sideways. Ford's bear market means attraction only to buy-and-hold-forever investors.
The author holds a long position in F.
