When Ford Motor (F) posted Q2/23 results that beat analyst estimates, shares rallied in after-hours trade, only to lose 3.42% the next trading day.
Ford warned investors that it would not meet its electric vehicle production targets. It pushed out its output target to 2024 instead of 2023. To diversify from the money-losing EV venture, Ford emphasized its expansion into hybrid vehicles.
If investors wanted to hold hybrid vehicle producers, they would have bought Toyota (TM) stock instead.
Bold Action Fades
Markets now doubt Ford’s bold action to fight global climate change. The more it invests in EVs, the more money it loses. It cannot reasonably catch up to the EV incumbent, Tesla (TSLA). Instead, the firm relies on the Federal government’s mandates of abolishing internal combustion car sales by 2035.
F stock bears higher risks from here. The firm relies on the Ford Bule segment for a positive adjusted EBIT of 9.8%. Ford Pro had a margin of 13%. But the Ford Model E segment posted a -58.5% margin.
Strong Cash Flow
Ford posted $2.9B in adjusted cash flow. It ended Q2 with nearly $30B in cash. This cash may dwindle. Product quality remains an issue. The firm assumed a higher industrywide customer incentive program, EV pricing pressure, and higher warranty costs ahead.
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