The hype behind electric vehicles remains as strong as ever. While Tesla (NASDAQ: TSLA) remains the undisputed industry king, investors were cheering on Thursday on the expectations of another American car company that might soon challenge Tesla for market share. That company is Ford (NYSE: F), which made history yesterday after the hitting a $100 billion market cap for the first time, the highest valuation seen since Ford went public.
There wasn’t any special catalyst or news announcement that led to this surge in stock price. Shares have just been steadily rising over the past months as investors continue to feel excited about the company’s upcoming lineup of electric vehicles. This includes the company’s Mustang Mach-E crossover and an upcoming electric version of its famous F-150 pickup truck. Both cars are due out sometime this spring.
While transitioning into the EV market might sound like a good idea on paper, it’s a move that many car companies have hesitated about making for a while. Ford’s idea to enter this business is part of a turnaround plan led by the company’s new CEO, Jim Farley, who took the job back in October 2020.
Thanks to many good decisions on the part of Farley, Ford now is worth more than General Motors (NYSE: GM), the latter’s market cap trailing at around $90 billion. Despite General Motors having gone essentially all-in on the EV trend, it didn’t stop the company from being eclipsed by Ford over this past year.
Ford’s rise has also made it larger than another highly anticipated electric vehicle company, Rivian Automotive (NASDAQ: RIVN). The company, which has received backing from Amazon, went public earlier this year in one of the most looked-forward-to IPOs of the year. Since then, shares have lost more than 30% of their value, with the company’s market cap now sitting at $72 billion.
“The stock market’s attraction to the Ford EV story continues to take us by surprise. Ford’s share price movement is impressive and management deserves credit for changing the strategic narrative, triggering a re-rating,” said Morgan Stanley analyst Adam Jonas in a note to investors. “However, at this juncture, we believe the risks facing Ford and the sector are rising faster than the opportunity.”
Jonas isn’t the only analyst to express some concern over both Ford’s inflated valuation as well as the current state of the EV industry. Regardless, more analysts are optimistic about Ford than neutral or bearish.
Shares of the American car company were up as much as 5.5% on Thursday. Over the past 12 months, the company has returned an impressive 146.1%, making it arguably the best-performing car company on a publicly listed exchange for 2021. Time will tell whether Ford will truly emerge as the American rival to Tesla or not.
Ford Company Profile
Ford Motor Co. manufactures automobiles under its Ford and Lincoln brands. The company has about 14% market share in the United States and about 7% share in Europe. Sales in North America and Europe made up 69% and 19.5% of 2020 auto revenue, respectively. Ford has about 186,000 employees, including about 58,000 UAW employees, and is based in Dearborn, Michigan. – Warrior Trading News
