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Why Ford Motor Stock Is Rising Today

By John Rosevear - May 18, 2020 at 10:46AM

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Factories are restarting, and investors are cautiously optimistic.

What happened

Shares of Ford Motor Company (F -1.25%) opened higher on Monday, as a much-anticipated restart of its U.S. and Canadian factories appeared to be going smoothly.

As of 10:15 a.m. EDT today, Ford's shares were up about 5.6% from Friday's closing price.

So what

Monday morning marked the moment that auto investors have been anxiously awaiting, as Ford (and its Detroit rivals and their suppliers) restarted production lines after a two-month shutdown.

The assembly line at Ford's Dearborn Truck Plant.

Ford successfully restarted most of its assembly plants in the U.S. and Canada on Monday morning. The factories have extensive new measures in place to protect workers. Image source: Ford Motor Company.

Ford, along with much of the rest of the auto industry in North America and elsewhere, shut down its factories in mid-March amid efforts to slow the spread of the COVID-19 virus. Ford's manufacturing experts and skilled workers have spent the last several weeks planning to restart those plants, with extensive new measures in place aimed at protecting workers from the virus. 

With two exceptions, all of Ford's assembly plants in the U.S. and Canada were expected to restart today. Those two factories, Flat Rock in Michigan and Oakville in Ontario, will restart on May 25, Ford said. 

Now what

Ford books revenue when its vehicles are shipped to dealers; with its factories idled, the company has been burning huge amounts of cash. That changed today, and that's good news. But Ford isn't out of the woods yet.

Many questions remain, but investors should focus on two big ones. First, will Ford (and its suppliers) be able to sustain production without virus outbreaks? Second, what will demand for new vehicles be like as America gradually reopens?

We'll learn a lot more on both fronts in the weeks to come. 

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