Why Ford Stock Has Been Charging Higher This Week
What happened
Ford (NYSE: F) stock bounced this week after an extended slide that saw it drop more than 25% in less than a month. But investors seemed to feel that was at least a short-term bottom, and they have pushed shares up 9.1% this week as of early Friday trading, according to data provided by S&P Global Market Intelligence.
So what
The reversal was sparked after the company released its September sales report. Investors cheered that Ford said its EV sales nearly tripled year over year in September. It added that its total share of the EV segment has reached 7%. The EV segment growth was led by its F-150 Lightning, but even the Mustang Mach-E sales had increased 47.3 percent compared to last year.
Image source: Ford.
Now what
While demand for Ford's EV offerings remains strong, investors should remember that at under 4,700 units, EV sales represented just 3.3% of the company's total U.S. sales last month. And even though it bounced back this week, the stock has been hammered in recent weeks after Ford warned in mid-September that third-quarter results would be hurt by rising costs and supply chain snarls.
While Ford tried to calm investors by reaffirming its estimate for 2022 adjusted earnings before interest and taxes (EBIT) of between $11.5 billion and $12.5 billion, it warned that inflation-related supply chain costs have exceeded internal expectations by $1 billion.
Supply chain delays are also causing 40,000 to 45,000 vehicles to remain in inventory lacking some parts. Those sales should still occur in the fourth quarter, but the higher costs are being absorbed by Ford. Investors this week felt the stock had taken enough of a hit from that news, however, and that has it on pace for gains of close to double digits this week.
10 stocks we like better than Ford
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Ford wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 30, 2022
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
