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So in this video today we are going to be talking about ford stock which is currently trading around five dollars per share and a lot of people have been dming me and leaving me comments asking whether or not i think this is a good time to invest in ford stock given that it is so cheap or appears to be cheap here at five dollars per share so i’m going to share
With you guys my thoughts and feelings on ford stock i’m gonna share with you my bullish perspective as well as my bearish perspective and at the end of the video you can decide for yourself whether or not this is a stock you would want to invest in now right now based on the current market conditions this is actually a pretty exciting time to invest in the stock
Market because a lot of stocks have gone massively on sale a couple of stocks i’ve purchased myself that have gone on sale include boeing as well as american airlines and delta airlines because i see these as buying opportunities in my opinion so first of all guys before we get into my bullish and bearish perspective here on ford stock let’s do a little recap as
Far as what has been going on with this stock over the last couple of years so even though ford stock is down massively over the last month or two the slide actually began back in 2013 when ford stock was trading for 17 dollars per share or so then from 2013 to 2019 it slid from 17 dollars per share to around $8 per share in early 2019 now during this time period
Ford continued paying dividends so even though you lost out massively if you bought shares a ford stock around 2013 or anywhere in between at the very least you still had a small amount of dividend income that was coming in allowing you to have some type of return from this investment but then once this pandemic started ford stock went into an absolute freefall the
Stock went from nine dollars and 18 cents per share on february 4th to a low close of $4 in one cent on march 23rd which is a loss of 56% over the course of six weeks now a lot of stocks did sell-off you know 20 30 40 percent but a 56 percent sell-off in a stock that was already in a downtrend this was just an absolute insane move that we saw here with ford stock
So if we compare the current price of ford stock to where it was in 2013 when it was $17 per share ford stock is down about 76 percent and to put this in perspective here for you guys i want to compare an investment in ford stock to an investment in the s&p 500 so in january 2013 if you invested $1,000 in the s&p 500 you would currently have 1826 dollars
Not including any dividend payments on the other hand if you invested that same $1,000 in ford stock you would be left with 354 dollars not including dividends so during one of the best bull markets that we have ever seen in history ford stock dropped about 76 percent so i just wanted to explain this context here to set the stage for why we saw this mass exodus
With ford stock happening where it dropped 56% over the course of a month and a half and one huge thing happened with ford stock that led to this sell-off and that was eliminating their dividend because like i said guys from 2013 to where we are today despite the fact that ford stock was continuing to go down they still paid a dividend and that is enough to keep
Some investors around because they can justify holding that position because even though it is going down they say well you know i’m earning dividends i’m reinvesting dividends my dividends will earn more dividends and over time when the stock goes back up you know it will be a sound investment and i’ll have more shares than i had before well that whole story
Changed when ford had to eliminate their dividend entirely they were paying a dividend of 15 cents per share which they suspended on march 20th due to the virus in the slowdown it’s acted of auto sales well at that point all of those people that were holding on to ford stock for the dividend now had no logical reason to hold on to the stock because they had no
Potential way to get paid they hadn’t seen virtually no capital gains on this stock since 2013 their investment in terms of the share price went down massively if they bought pretty much any time in the last seven years and now the only reason for holding this stock which was the dividend was yanked out from under them so as a result we saw a mass exodus of the
Stock as battered investors finally threw in the towel they said i’m done i give up this stock is doomed and they sold out of it and that is why it went down so much in that six-week period now a lot of people got caught in a nasty trap here because before they eliminated their dividend ford was showing a double-digit dividend yield and that’s a topic we covered
In another video called the number one dividend investing mistake i’ll put a card up in the corner but essentially people will often buy into these high-yield dividend stocks and not realize that a dividend cut or a dividend suspension is right around the corner so they end up buying a stock because they see a high dividend the dividend gets cut and then they’re
Stuck bag holding a position they would have ordinarily never purchased if it wasn’t for that dividend and that’s exactly what we saw happen here with ford stock and if you guys are enjoying this video so far all that i ask is that you drop a like for the youtube algorithm it helps this video to be shared with more people alright so what is the bullish perspective
Here on ford stock why would somebody buy a stock like this right now and we are seeing people buying shares of ford stock because it was as low as $4 per share and now we are back up above $5 well here’s the bullish perspective on ford stock i have three points to make here number one we learned that ford is eliminating all passenger cars because this is just not
What they’re good at they have a very difficult time competing with toyota and honda with the overseas passenger cars so they’re exiting that business entirely except for them stang which is a very iconic vehicle and a big seller for them so instead they’re gonna focus on their suvs like the explorer and the escape as well as the very well-known ford f-150 and they
Also brought back the ford ranger which is a smaller truck that was popular i think maybe fifteen years ago or so so essentially what they’ve done is they’ve mixed up their product lineup they’ve axed the passenger cars and they’re gonna focus in on what is working for them which is primarily suvs and trucks as well as the mustang and lastly one other interesting
Thing here is they are going to be doing a reboot of the ford bronco which was a very popular vehicle back in the day and they also launched an electric version of the mustang a mustang suv and that’s one that was kind of you know mixed mixed review for people some people were very upset about the fact that an suv was being called a mustang however visually it’s a
Very attractive vehicle but like we’re gonna talk about in my bearish perspective here guys i don’t think this is going to be you know a huge life-saving vehicle for ford in terms of the ebee market as that becomes more popular and the other thing is people really think that ford bronco is pretty cool i’ve seen it shared on social media but it’s unclear if people
Are actually going to buy one you know a lot of times we see stuff we go oh that’s really cool we share it with our friends but are people actually going to go to the dealer and pony up you know 30 or 40 grand maybe 50 whatever the cost is and actually purchase a ford bronco that we will have to see when they actually release this vehicle so it’s kind of unclear
Whether or not that’s going to be a big seller for them or if it just generated a lot of social media hype my second point here as far as a bullish perspective here is that four does have a relatively attractive balance sheet in terms of their cash situation so despite the fact that ford has gone down massively in the short term and sales are expected to plummet for
Auto makers they have hoarded a fair amount of cash and this is a company that’s been around for multiple recessions they know what to do then how to get through a bear market and a recession and right now their cash situation looks pretty good so i don’t see any cash crisis in the future here for ford and they will very likely be able to weather this recession
Just fine that is because currently they have seventeen point five billion dollars in cash and cash equivalents as well as 17 point 1 billion in other short term investments that are very easily convertible to cash so most people add those figures together to get the cash this company has and that comes out as a figure of thirty four point six billion dollars so
Based on the fact that they have about thirty five billion dollars on the sidelines i think they’re in a pretty good situation here to weather this storm and then number three the third point here is that ford stock based on the historical pricing is cheap right now so if we look at the stock right now they’re currently trading at about a ten-year low and they’re
Currently valued at about twenty billion dollars by the market which is the market capitalization and what i like to do is compare that value to their competitors to see how much value the general public sees in this company so as we said the market values ford right now at just twenty billion dollars so compared to toyota which is a higher quality better run
Company right now with you know more popular products they are valued at 200 billion dollars so right now toyota is worth 10 times what ford is worth so if you agree with that then you may think that ford is still expensive but if you think about that and you say man i still think ford is worth maybe half or a third of what toyota is that maybe thinking hey this
Stock could be cheap at this point and then when we compare this to tesla which again tesla has a lot of growth potential they were valued at about a hundred billion dollars as of outlining this video or roughly five times the value of ford and if you look at the forward p/e for ford it is trading at a forward p/e of 10 which is just 10 times their future earnings
Potential now earnings may go down which could elevate the pe the pe but as of right now based on their earnings potential the stock is trading at a 10 which is relatively low all right so there’s the bullish perspective on ford now let’s talk about the bearish perspective or why people would not touch this stock with a ten-foot pole first of all we may be in a
Recession or we may be about to enter a recession and automakers do not fare well in a recession one of the very first things people stop spending money on in a recession is new cars and instead they keep their older vehicles and they maintain them for longer so during the recession automakers get absolutely hammered and we’re already seeing some numbers here out
Of china in february auto sales fell 79 percent which was the biggest drop ever for china so when we see our auto numbers in the us we’ll get a better idea of just how bad it’s going to be now this is also amplified by the social distancing in the closure of businesses but still 79 percent drop is horrible and we’re probably going to see similar numbers here in the
Us sales and revenue for auto makers decline for the duration of the recession and i wouldn’t be interested in buying a stock where the future looks worse than today if you look at forward right now the future looks worse than right now where we are today and especially considering the fact that we just came off a ten-year bull market and during that period ford
Was did not do well at all they went from 17 a share down to 5 and suspended their dividend so if they didn’t do well in a bull market when people have extra money to buy new vehicles that’s just not a stock i would personally want to own and i will say this guys i did buy a couple shares for my speculative $100 portfolio and if you didn’t see that video guys i’ll
Pop it up in the corner but i would not invest any sizable amount of money and ford personally and in my opinion i would only invest what you are willing to lose 100% of in a stock like ford second of all another reason people are just exiting ford is because of the declining market share of the american automakers so ford still does have about 14 percent market
Share in the us which is second to general motors who has the lead in the us however market share has declined significantly for ford at one point they had 19 percent market share here in the us and now in 2019 they’re down to 14 now you might be saying hey you know 19 percent to 14 percent that’s not that much but even just one percent market share could be tens
Or hundreds of millions of dollars in sales that ford no longer has based on losing market share but rather than looking at the us market share i think a better number to look at here is the global vehicle production numbers and in that case ford comes in fifth place for vehicle production and while this chart may not look that bad back in 2000 they were in second
Place they were the second largest producer of vehicles in the world and now they’re fifth they had 19 percent market share u.s. now they have 14 and so gm and ford went from the number 1 and number 2 automakers globally to number 4 and number 5 and i just expect that trend to continue because people just don’t buy these american vehicles anymore they’ve gotten
Burned by them based on quality issues or not being innovative or whatever the reason is people are just not buying these vehicles anymore now i do think ford is making the right decision by cutting off the passenger cars that it’s just a market they have no chance of surviving or competing in but it’s a question of whether or not the suvs and the ford f-150 and
Maybe the relaunch of some of these popular older vehicles is going to be enough for them and lastly on the bearish perspective i have just one word here guys and that is tesla while i’m not a tesla shareholder myself i would personally not want to be owning a stock in any company that tesla or elon musk is competing against and i just think that tesla is going to
Dominate the electric vehicle market and while ford does have you know some skin in the game with the electric vehicles they just don’t have that same clout i guess that tesla has where pretty much anything they do it’s plastered all over you tube it’s plastered all over the news you know ford releases an electric vehicle they did get some press around the mustang
Suv but it was very negative press because a lot of people were actually mad that they were calling a electric suv a mustang so it was kind of not the right kind of press and so that is what happens with tesla pretty much anything they do makes headlines all over the world and for that just doesn’t have that same appeal nobody really cares what ford is doing and
That’s just based on you know the people feeling towards the brand people just don’t have that loyalty and interest towards the ford brand as they do with tesla tesla is a newer company they’re more agile they can take more risks and they can move a heck of a lot faster than ford on top of that tesla also understands aesthetics and branding and they have a much
More appealing brand to millennials that’s why you know everybody talks about it they’re also the leading evie manufacturer right now and it’s likely to stay that way the mustang mach ii does have some appeal to it i looked at it and i said you know it’s a pretty attractive vehicle but i just think if you put two options in front of people of a tesla or a ford
Electric vehicle nine times out of ten especially millennials are going to want that tesla so anyways guys that is my opinion on ford stock right now both the bullish perspective and the bearish perspective i would love to hear what you guys think down in the comment section below do you agree with me do you disagree with me let’s get the conversation started down
There last thing i want to mention real quick guys is if you want to get two free stocks weeble is running a promotion right now or if you sign up for a brokerage account with them right off the bat you’re going to get one free stock then if you fund it with $100 or more on your initial deposit you’ll get a second stock completely free so that’s a way you can get
Two free stocks if you want to check it out guys that’s the top link down in the description below if you’re new to the channel guys make sure you subscribe and hit that bell for notifications if you haven’t hit a like or drop the like on this video already please do so and i hope to see you guys in the next video
Transcribed from video
Is Ford (F) Stock A Buy At $5? 3X Return? By Ryan Scribner
