Why Ford Stock Popped -- Then Dropped
What happened
Ford Motor Company (NYSE: F) stock raced ahead in noonday trading on the NYSE Friday, notching a 2.2% gain after reporting a third straight month of sales growth.
Ford stock quickly gave back those gains as the afternoon wore on, however. As of 1:40 p.m. ET, the stock is back in the red with a 0.5% loss.
So what
In Ford's August sales report, released this morning, the company noted that its total sales for the month surged 27.3% year over year, with highly profitable trucks and SUVs up 13.2% and 47.7%, respectively -- and sales of electric vehicles up more than 307%! (It's probably worth pointing out, though, that 307% sales growth means Ford still sold fewer than 6,000 EVs in the month.)
Still, Ford significantly outgrew the battered and supply-constrained automotive industry where overall sales grew only 4.8% in August. And within EVs in particular, Ford noted that the majority of its sales (60%) were of "conquested" customers, i.e., customers who switched brands to buy a Ford.
Now what
So if August was such a great month for Ford, why is the stock already giving back its gains today?
The answer may have something to do with Ford's other big news this week, specifically, its announcement that it's recalling some 475,000 (or roughly three times the number of vehicles it sold in August) for a pair of problems. From the model year 2015 through the 2017 Ford Expedition and Navigator SUVs, 198,000 vehicles are being recalled to fix blower motors that could cause interior fires. An additional 277,000 Ford vehicles are being recalled to fix anti-reflective coatings on their rearview cameras, which can become degraded by ultraviolet light overtime, causing camera views to become "foggy."
Both issues seem relatively minor and shouldn't entail too much cost for Ford to fix. But when it comes to warranty repairs, every little bit hurts.
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Rich 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.
