What happened
U.S. markets are on the rise Monday with many beaten-down stocks jumping higher. But shares of Ford (F 0.94%) 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.
NYSE: F
Key Data Points
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.
