EV
EV concerns overshadow strong Ford sales. Cramer says the stock is down enough
June 4, 2024
41 2 minutes read
Ford had another month of strong sales, but a wider appeal on Wall Street for the stock depends on cutting the automaker’s massive EV division losses. Ford said Tuesday it sold more than 190,000 vehicles in May, an 11% increase from a year ago. Sales of internal combustion engine (ICE) vehicles — where most of the revenue comes from — rose 5.6%. Sales of hybrids and all-electric vehicles each grew by nearly 65%. Hybrid sales at 17,600 in May and EVs at nearly 9,000 are both high-growth areas but still relatively small. The near-term potential for the two, however, is quite different. The May numbers provide evidence once again that Ford made the right decision when deciding to shift more resources to high-margin hybrids from money-losing EVs. In the first quarter, Ford lost more than $100,000 per EV sold. That figure, according to Bloomberg , was twice what it was last year. To be sure, it includes sunk costs for the division beyond just auto production such as battery manufacturing. During CNBC’s “Squawk on the Street” on Tuesday, Jim Cramer was surprised when he heard that number and said it makes sense that investors are discouraged by those kinds of EV losses. He also lamented the underperformance of Ford stock relative to rival General Motors — ever since GM announced a buyback in November. He has said over and over that Ford should do a buyback because it would boost shares. However, Jim thinks Ford stock has come down enough. He best summed up his thoughts during last week’s May Monthly meeting for Club members. “I know I have been tearing my hair out over this one, but you can earn 5% on a CD or you can earn a 5% annual dividend yield on shares of Ford . The CD is not going to entertain the idea of buying back stock, and it is not going to have a very good quarter because the electric vehicle losses are being stemmed. This stock was at $13.50 per share just a few weeks ago, and I feel better about it now nearly $2 lower than I did back then. What more of an endorsement could there be? The stock is at a level where we are upgrading it to our buy-equivalent 1 rating .” Ford shares lost more than 9.5% quarter to date. Zooming out, the stock fared a bit better — declining a smaller 1.5% year to date. F YTD mountain Ford YTD (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Ford display at the New York International Auto Show on March 28, 2024.
Danielle DeVries | CNBC
Ford had another month of strong sales, but a wider appeal on Wall Street for the stock depends on cutting the automaker’s massive EV division losses.
