About a month ago, I came out with a piece detailing why Ford Motor Company (NYSE:F) stock isn’t getting better anytime soon. Since then, Ford investors have been victim to a bad Europe sales report, a bad U.S. sales report, an uninspiring quarterly earnings report and odd but perhaps foreboding moves by police departments to sideline their Ford Explorers fleet. All told, F stock is down more than 5% over the past month while the S&P 500 Index has rallied almost 1%.
The under-performance is nothing new. Over the past 6 months, the S&P 500 is up about 6%, while F stock is down nearly 14%.
Over the past year, the S&P 500 has rallied roughly 12%, while Ford stock has dropped 12.4%. Over the past three years, the S&P 500 is up almost 30% while the stock is down over 35%.
Unfortunately for F stock investors, the under-performance trend will continue, and may even worsen.
Ford Faces Big Secular Headwinds
Despite having been one of the most recognizable brands in the world for several decades, Ford is now gradually losing relevance in the consumer landscape.
Why? Two reasons: falling car ownership rates and rising vehicle eco-friendliness. That is a deadly 1-2 punch for F stock. It’s already showing up in Ford’s numbers (U.S. sales and Europe sales are down year-over-year), and the negative effects will only get larger.
The biggest problem here is that private car ownership is far less important to Millennials than it is to their parents. Why? Well, mainly the rise in popularity of ride-sharing services like Uber and Lyft, but there is a lot more to this narrative than just that. Look at other consumer-facing services that are roaring in popularity. Postmates, GrubHub Inc (NYSE:GRUB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), Hulu and Blue Apron Holdings Inc (NYSE:APRN), just to name a few.
What do all of these services have in common? They allow customers to get everything they want delivered right to their homes. This is the at-home economy. Its here, and its not going away. Unfortunately for Ford, consumers don’t really need a car in this new way of life.
Consumers don’t go to the movies as much as they once did. Instead, they are watching Netflix, Amazon Video and Hulu from the comfort of their couches.