What happened
Shares of American automotive giant Ford Motor Company (F 0.57%) popped 26% last month, according to data provided by S&P Global Market Intelligence. The leading pick-up truck maker saw steady growth, stabilized selling prices, and announced a new charging partnership with Tesla in recent weeks.
As of this writing, shares of Ford are up 31% year to date (YTD), with the majority of this year's gains coming last month.
So what
As many know, any association with Tesla gets investors excited about a stock. So it is no surprise to see Ford's stock price soaring when its investor relations announced that Ford electric vehicles would be getting access to 12,000 Tesla superchargers in the United States. These fast-charging stations are spread out around the country and serve as the "gas stations" for electric vehicle owners when traveling long distances.
How relevant is a charging partnership when most consumers just charge their cars at home? Not very, but I doubt Ford shareholders are complaining. And right now, it is the narrative around Ford's success in electric vehicles by partnering up with Tesla that matters more for the share price.
More relevant was Ford's sales data from the month of May, which was released in June. In May, Ford unit sales were up 10.7% year over year, driven by 31.6% growth in the truck category. With semiconductor shortages in the rearview mirror, the No. 1 selling vehicle in America -- the Ford F-150 -- got back to dominating the truck market.
Ford is also seeing strong growth from its new electric truck, the Ford F-150 Lightning. Sales from the new product were up to 1,700 units in the month of May, compared to just 200 a year ago.
Combine this strong growth with third-party data showing Ford's used car prices stable or even growing in recent months, and it isn't surprising to see investors buying up shares of Ford stock last month.
Now what
Over the long term, what will truly drive Ford's stock price is earnings growth. Ford's operating income is up over the last few years, hitting $12 billion over the past 12 months, but is still down from highs set before the pandemic. The company is still burning a lot of cash as it makes the transition to electric vehicles, with plans to spend tens of billions of dollars over the next few years to build out its manufacturing base. If the company can successfully make this transition, the stock will likely do well from there.
