What happened
U.S. markets are on the rise Monday with many beaten-down stocks jumping higher. But shares of Ford (F 0.08%) are trailing both the S&P 500 and Nasdaq Composite this afternoon. As of 3:12 p.m. ET, the S&P 500 was holding on to a gain of 2.5% while the tech-heavy Nasdaq was soaring 3.2%. But Ford stock is lagging both sectors today, with a small gain of just 0.9% at that time.
So what
Investors aren't yet sure whether to consider Ford an industrial stock or one that fits with the fast-growing electric vehicle (EV) sector as it builds a new EV lineup. Ford expects to invest $50 billion to grow its EV production and create its new segment designated Model e.
Image source: Ford.
Ford reported it is off to a good start with its September sales report. Its EV sales jumped 197% year over year in September. That growth was led by its F-150 Lightning, but even the Mustang Mach-E increased sales by 47.3% compared to last year.
Now what
But last week, UBS analyst Patrick Hummel told investors to sell Ford stock and dropped the price target to $10 per share. That's more than 14% below where it closed on Friday. Hummel noted that Ford has lower North American operating profit margins than some of its main competitors and thinks a slowing or contracting U.S. economy could wipe out the company's profits.
Ford needs those profits to help fund its growth plans. Investors today are worried that the automaker could be in a tough position of spending billions for growth while working to maintain profits from its ongoing internal combustion engine business.
