Ford Motor Appears to Be a Buy After Electric Vehicle Pivot
Taking a closer look at the automaker after its CEO conceded a harsh reality for EVs.
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Long-time subscribers to the defunct "Stocks Under $10"portfolio and current readers of the still running "Stocks Under $10" column at TheStreet Pro would be no strangers to my tendency to trade, usually profitability, in and out of Ford Motor (F) .
The Sarge-folio had been in the name as recently as this past November. That's when the portfolio liquidated the name at an average of $12.85, which was good for a profit of 33.9%, despite exiting about $1 below where we should have due to my poor execution. Ford has been kind over the years to both my own portfolios and the SU $10 series as a trading vehicle despite having mostly traded sideways for years.
Now Some News
I think it's good news, though I labeled it as "bad news" in Market Recon on Tuesday morning. The bad news is the $19.5 billion write-down. The good news is the change in direction that the firm will now undergo concerning its efforts in the electric/hybrid vehicle space. For those who missed it, Ford will be taking a $19.5 billion write-down on its electric vehicle division. While appearing on CNBC on Monday, Ford CEO Jim Farley said, "EVs just weren't selling. This was the right time to listen to the customer."
I think most readers know that I am a fan of Farley's. No, he's not in my CEO Hall of Fame, but I think his honest love for the business he's in and efforts to make Ford Motor excel are quite evident. This guy loves cars and he loves Ford.
As part of the firm's structural shift, production of the current edition of the F-150 Lightning electric pickup truck will cease. The firm will pivot its electric vehicle operations toward hybrids, extended range vehicles and smaller models.
There are still plans for an eventual next generation F-150 Lightning, but it will be more of an extended range electric vehicle. Ford still sees these types of vehicles (EVs and hybrids), in the aggregate approaching a 50% market share by the year 2030, up from about 17% in 2025. This is not about giving up. This is about being smart. Ford does not report until the second week of February.
Buying Opportunity?
Yes, I think so, but not here, and not now. Let's have the chart do the talking, shall we?
Readers will see how the ascending triangle that spanned from early April into early September worked like a charm and gave the stock the pop that was needed to exit that trade mentioned above profitably.
However, that pop in the share price developed into what is starting to look like a possible double-top pattern of bearish reversal based on Tuesday morning's last sale.
Should the stock breakout to the upside destroying the double top, I'll walk away for now. However, should this pattern fully develop, its downside pivot is right around $12.40. For me, that puts my buy zone in the $11.20 to $11.40 range. With the stock's 200-day SMA currently standing at $11.27, this is where I think the pros defend the stock and this is where I want to re-initiate given the chance.
At the time of publication, Guilfoyle had no positions in any securities mentioned.
