What happened
Ford Motor (F +6.71%) stock took a beating in June and slumped 18.6%, according to data provided by S&P Global Market Intelligence. Investors in the auto stock had a lot to worry about last month, and Ford's first big announcement so far in July has failed to impress the market.
Yet its stock could turn out to be a surprise winner in the coming months.
So what
First up in June were Ford's monthly sales numbers, and contrary to what the headlines said, they were great.
The company's total vehicle sales in the U.S. fell 4.5% year over year in May. However, it outperformed the industry as sales for every other automaker in May declined by double digits, and it even gained 3.5 percentage points in market share to take it to 13.5% -- all of this despite the severe ongoing semiconductor supply crunch and logistics constraints.
Image source: Ford.
The biggest takeaway, though, was the sky-high demand for Ford's electric vehicles (EVs). Its EV segment grew nearly four times faster than the industry in May, with its EV sales jumping 222% year over year. While Mustang Mach-E sales rose 166% to record highs, E-Transit vans reported their best monthly sales ever.
So why did shares of a company bucking the industry downtrend and gaining market share fall? Recalls and a teetering economy were to blame.
Although Ford said it'll recall nearly 3 million vehicles across different models built between 2013 and 2021, that didn't irk investors as much as its Mustang Mach-E recall. The company didn't just recall nearly 49,000 units of the hot-selling electric crossover, but also stopped its sales altogether on overheating concerns until further notice.
This development, unfortunately, cropped up around the same time as when the Federal Reserve hiked interest rates by 0.75 percentage points to control inflation that had just hit 40-year highs. The dual blow intensified selling pressure on Ford stock as investors feared higher interest rates will be add to Ford's costs at a time when its sales could slump if a recession were to hit the U.S.
NYSE: F
Key Data Points
Now what
Ford's recall woes aren't over yet: Just a few days ago, the company said it'll recall 2,900 F-150 Lightning trucks, which it started selling only in May, to fix a software issue related to tire pressure.
There's not much to read into this, though. It's not uncommon for newly launched vehicles, especially EVs, to run into problems, and this is an inconsequential software issue that can be fixed at a dealer within 20 minutes.
Meanwhile, Ford's June sales numbers that just came in are hugely impressive despite lower Mach-E sales. Here are some incredible numbers from its latest sales report:
- Its U.S. sales jumped 31.5% year over year when the overall industry sales dropped 11%.
- Ford's average transaction price increased by roughly $1,900 per vehicle sequentially.
- F-Series, which includes F-150 and Ford Super Duty pickup trucks, made up 37.9% of the company's total sales mix in June versus 32% in May.
- Its EV sales surged 76.6% year over year, driven by E-Transit.
- Ford delivered its first F-150 Lightning pickup truck on May 27. By June 30, it had sold 2,296 trucks.
Ford's numbers may not have impressed analysts, but any further drop in the stock's price is a no-brainer opportunity to buy. The automaker has only just started selling F-150 Lightning trucks and is already expanding production capacity to meet demand. It may not be long before investors realize this growth stock is now too cheap to ignore anymore.
