“What’s wrong with Ford is that investors and the broad marketplace think it is a tired old company from a dying town, Detroit. The facts suggest otherwise…”
Pause for a moment and consider Ford Motor Co., a 112-year-old car company that emerged from the recession with a focused business plan and a clear vision of what its products should be.
Five years ago, in fact, Ford looked like a potential profit-spinner with enormous potential. And Ford has, indeed, been churning out profits year after year. Yet if you bought Ford late in 2011 and held tight, hoping for the market to deliver greater rewards, you have been horribly disappointed.
The new Ford GT race car for WEC and Le Mans competition. The Ford GT race car will debut in 2016, and will be campaigned by Chip Ganassi Racing.
Ford traded at about $16 five years ago, while the broad S&P 500 has soared — from about $1,300 to around $2,100 today (all figures in U.S. dollars). As I write this, Ford trades at $14.25, which is almost exactly where the share price rested December 29, 2013.
What’s wrong with Ford Motor? Can it be fixed? Why has Ford lagged the market for years, despite posting record profits? Why have investors largely shunned Ford, despite the company’s steadily improving quality, great designs, productive plants, a carefully considered global expansion plan (including China), an attractive and growing dividend, and a shockingly successful succession strategy (CEO Mark Fields took over from Alan Mulally without the slightest hiccup)?
Ford’s stock has been stuck in the $12-17-range for a simple reason: Ford has been a victim of an anti-Detroit, pro-innovation bias that runs deep and wide through the investment community and a large chunk of automotive consumers, as well. To all of them, Ford is “old Detroit,” tired, out of step and ready to be put out of everyone’s misery.
The Ford GT supercar will race at Le Mans — well, a race-prepped version of it — while the version headed to showrooms will help define Ford as an innovative company.
Ford, though, would like you to see the company differently – as a Silicon Valley-like innovator and disruptor. Proof? Ford says it applied for 5,872 patents in 2015 – a record and an increase of 36 per cent over 2014. Electrified vehicles? Ford applied for 400 patents in this area alone last year.
Ford, as Ford Global Technologies CEO Bill Coughlin told Bloomberg, has become an inventive company. “Once someone starts thinking like an inventor, they can’t turn that off,” adding that “it changes your mindset more toward one that would be very familiar in Silicon Valley.”
Ford has very active research programs working on driverless cars and electrified vehicles, along with more conventional technologies designed to improve fuel efficiency, safety and connectivity. By 2020, Ford will have invested another $4.5 billion (US) in electrification, adds the automaker.
Automotive News reports that Ford is in talks with Google to build Google’s next-generation driverless cars under contract. Ford has stopped publicly referring to itself as a car company; Ford is now a “mobility” company.
CEO Mark Fields says Ford sees Google, Uber, Apple and their ilk as emerging competitors. He admires them, is inspired by them, worries about them, and wants to invest his own company with a Silicon Valley-like culture.
“So, we’re really pushing ourselves to think, to act and disrupt like a startup company,” he told analysts during a recent conference call.
There you have it. What’s wrong with Ford is that investors and the broad marketplace think it is a tired old company from a dying town, Detroit. The facts suggest otherwise, though we can assume that many will scoff at Ford’s pronouncements as mere lip service.
Personally, I don’t have any investments in car companies or their suppliers; it would be a conflict of interest. But I’ve tested many Ford products, talked with the company’s leadership and considered the company’s plans for the future. If I could invest in a car company, I’d place a small bet on a profitable Ford at $14.25.
Ford just may be an existing car company with the wherewithal to reinvent itself in a world changing at lightning speed. For more evidence, skip the investment pages and instead visit a Ford dealer. Let the products speak for Ford.
Pause for a moment and consider Ford Motor Co., a 112-year-old car company that emerged from the recession with a focused business plan and a clear vision of what its products should be.
Five years ago, in fact, Ford looked like a potential profit-spinner with enormous potential. And Ford has, indeed, been churning out profits year after year. Yet if you bought Ford late in 2011 and held tight, hoping for the market to deliver greater rewards, you have been horribly disappointed.
The new Ford GT race car for WEC and Le Mans competition. The Ford GT race car will debut in 2016, and will be campaigned by Chip Ganassi Racing.
Ford traded at about $16 five years ago, while the broad S&P 500 has soared — from about $1,300 to around $2,100 today (all figures in U.S. dollars). As I write this, Ford trades at $14.25, which is almost exactly where the share price rested December 29, 2013.
What’s wrong with Ford Motor? Can it be fixed? Why has Ford lagged the market for years, despite posting record profits? Why have investors largely shunned Ford, despite the company’s steadily improving quality, great designs, productive plants, a carefully considered global expansion plan (including China), an attractive and growing dividend, and a shockingly successful succession strategy (CEO Mark Fields took over from Alan Mulally without the slightest hiccup)?
Ford’s stock has been stuck in the $12-17-range for a simple reason: Ford has been a victim of an anti-Detroit, pro-innovation bias that runs deep and wide through the investment community and a large chunk of automotive consumers, as well. To all of them, Ford is “old Detroit,” tired, out of step and ready to be put out of everyone’s misery.
The Ford GT supercar will race at Le Mans — well, a race-prepped version of it — while the version headed to showrooms will help define Ford as an innovative company.
Ford, though, would like you to see the company differently – as a Silicon Valley-like innovator and disruptor. Proof? Ford says it applied for 5,872 patents in 2015 – a record and an increase of 36 per cent over 2014. Electrified vehicles? Ford applied for 400 patents in this area alone last year.
Ford, as Ford Global Technologies CEO Bill Coughlin told Bloomberg, has become an inventive company. “Once someone starts thinking like an inventor, they can’t turn that off,” adding that “it changes your mindset more toward one that would be very familiar in Silicon Valley.”
Ford has very active research programs working on driverless cars and electrified vehicles, along with more conventional technologies designed to improve fuel efficiency, safety and connectivity. By 2020, Ford will have invested another $4.5 billion (US) in electrification, adds the automaker.
Automotive News reports that Ford is in talks with Google to build Google’s next-generation driverless cars under contract. Ford has stopped publicly referring to itself as a car company; Ford is now a “mobility” company.
CEO Mark Fields says Ford sees Google, Uber, Apple and their ilk as emerging competitors. He admires them, is inspired by them, worries about them, and wants to invest his own company with a Silicon Valley-like culture.
“So, we’re really pushing ourselves to think, to act and disrupt like a startup company,” he told analysts during a recent conference call.
There you have it. What’s wrong with Ford is that investors and the broad marketplace think it is a tired old company from a dying town, Detroit. The facts suggest otherwise, though we can assume that many will scoff at Ford’s pronouncements as mere lip service.
Personally, I don’t have any investments in car companies or their suppliers; it would be a conflict of interest. But I’ve tested many Ford products, talked with the company’s leadership and considered the company’s plans for the future. If I could invest in a car company, I’d place a small bet on a profitable Ford at $14.25.
Ford just may be an existing car company with the wherewithal to reinvent itself in a world changing at lightning speed. For more evidence, skip the investment pages and instead visit a Ford dealer. Let the products speak for Ford.
About the Author / Jeremy Cato
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