Ford Motor Company Share Forecast January 2022 – Time to Buy F?

Shares of American multinational automobile manufacturer Ford Motor Company (NYSE: F). Ford Motor Company recently halted its EV Lightning pickup truck reservations at 200,000 because of manufacturing concerns. It is planning to use its stake in EV manufacturer Rivian to fund future investments.

Ford Motor Company – Technical Analysis

Ford Motor Company’s financial statement indicates a market cap of $86.998 billion with total assets worth $252.677 billion. Revenue for 2020 was at $127.14 billion with a profit margin of -1.01% compared to $155.90 billion in 2019.

Oscillators such as Relative Strength Index (14)(66.12), Stochastic %K (14, 3, 3)(76.92), Commodity Channel Index (20)(202.25), Average Directional Index (14)(33.56) and Awesome Oscillator(0.84) are neutral. Moving averages such as Exponential Moving Average (10)(20.66),  Simple Moving Average (10)(20.45), Exponential Moving Average (20)(20.32),  Simple Moving Average (20)(20.27) and Exponential Moving Average (30)(19.97) are indicating a buy action.

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Recent Developments

As mentioned earlier, Ford stopped taking reservations for its upcoming F-150 Lightning pickup truck after reaching 200,000 in early December last year and won’t accept any more reservations before the electric truck’s likely summer 2022 arrival in showrooms. CEO James Farley attributed the halt to the oversubscription of their battery electric vehicles.

Ford’s workhorse F-series pickup had  20,000 reservations made on the first day and 160,000 by early November, with the last 40,000 taking place in less than a month. The truck’s popularity outstripped the current manufacturing capacity of 70,000 to 80,000 vehicles. The halt on reservations can be a sign of the speed and extent of Ford’s electrification plans. This is worrisome as it will not only lead to numerous cancelled reservations but will also allow rivals, such as Rivian, to step in with their own electric pickup designs.

Ford has committed to a $30 billion electrification project which includes the construction of multiple battery factories and a massive factory complex dubbed Blue Oval City in Tennessee. It also has a 12% stake in EV company Rivian where it had bought 102 million shares of Rivian in a series of purchases, spending $820 million in the process.

Should You Buy F Shares?

Investors might be worried about Ford’s inability to meet the the200,000 reservations as it suggests there could still be some speed bumps, and perhaps even stalls on the road to transformation. As impatient customers opt for gasoline vehicles or choose competitors’ EVs instead, some of Ford’s reservations may end up cancelled.

However, the halt is also a sign that demand is significant for an F-150 electric pickup. Many customers may be more willing to accept delays than if they had committed larger sums, as the reservation deposit is set at just $100. On the other hand, Ford is working aggressively to bring extensive factory capacity online as soon as possible, as evidenced by its $30 billion investment in EV and EV battery manufacturing. These investments will surely help the company to fill the 200,000 reservations and then expand production to much higher levels in the coming years.

Ford shares have surged 137% in 2021. Much of this has to do with its push into electric vehicle versions of its favourite models for getting investors excited about its long-term growth prospects. Analysts are also expecting Ford to return to double-digit top-line growth next year, something that investors haven’t seen since 2013. Ford’s profits have beaten analyst expectations for the last four reports. The company also recently brought back its quarterly dividend after nixing it when the pandemic began. This will provide Ford investors with some income on top of its massive capital gains. Based on this, now is a great time to buy Ford shares.

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