Why Is Ford (F) Stock Down Today?

Ford (NYSE:F) has seen shares fall this week after reporting declining sales. Electric vehicle (EV) innovator Tesla (NASDAQ:TSLA) has demonstrated an ability to withstand the supply chain shortage. Ford hasn’t been so lucky. The legacy automaker recently reported a significant drop off in sales the previous year, sending F stock down. Now, investors are left with questions regarding the future of the EV sector.

Ford (F) logo badge on grill of car
Source: JuliusKielaitis / Shutterstock.com

What’s Happening With F Stock

Yesterday, CNBC reported that Ford’s sales had declined 17% during the first quarter of 2022. The company cited the industry-wide chip shortage. F stock had already been declining, but since the news broke, its downward pattern has accelerated. As of this writing, it is down almost 5%. Ford isn’t the company only plagued by a lack of chips. Toyota (NYSE:TM) reported similar figures and is currently down 2.6% for the day.

Let’s take a closer look at Ford and what its future may hold.

Why It Matters

In August 2021, Scientific American predicted that the chip shortage was likely to slow production and rollouts across the EV sector. While this forecast wasn’t incorrect, the lack of available chips has certainly affected some companies more than others. This has become apparent by the figures reported by the sector’s most prominent companies.

Ford’s reported sales for the quarter were 432,132. While that figure was in line with analyst expectations, falling sales figures don’t inspire investor confidence. And while it’s easy to understand that the chip shortage made it hard for vehicle production to keep pace with demand, it’s difficult to ignore the fact that Tesla has managed to do exactly that. The leader of the EV race set a record for sales, while legacy automakers saw theirs fall.

At $15.88, F stock remains considerably below the TipRanks average price target of $22.53. Morgan Stanley analyst Adam Jonas, who is bullish on TSLA stock, maintains his “sell” rating and $13 price target on Ford. His most recent predictions for F stock were bearish, and they don’t appear to have changed following the recent sales statistics. And even bullish analysts, such as Wells Fargo’s (NYSE:WFC) Colin Langan have recently lowered their price targets.

No one should be surprised by Ford’s declining sales. InvestorPlace contributor Brian Paradza recently listed it among stocks hit hardest by the supply chain crisis. While its true that some investors may see these declines in F stock as a buy-the-dip opportunity, nothing we have seen from Ford this season has been encouraging.

What It Means

Through it all, Ford continues the narrative that it will see sales increase in the coming months. It has touted the popularity of its Bronco lineup, a reissue of an iconic former model. Whether it can pull Ford back into the green remains to be seen. What’s clear is that Ford’s foray into the EV sector hasn’t saved it so far. The company has proven it can’t compete with Tesla at the EV leader’s game even while it offers lower prices. While the supply chain crisis isn’t Ford’s fault, it shouldn’t be ignored that Tesla found ways to stay ahead through difficult times and Ford did not.

Some experts have touted the trend of insiders doubling down on F stock. While it should be reassuring for investors to see, it hasn’t helped the company overcome its troubling sales figures. At this point, F stock is a name to watch and hold.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/why-is-ford-f-stock-down-today/.

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