Oppostocks: Sold TSLA a while ago, thinking about Ford

A short while ago, I sold my TSLA shares a little too soon in the high $400 range.

I didn’t expect the shares to go to the moon the way they have. I still did well either way.


Anyway... I’m thinking about where to reinvest the proceeds... and I’m thinking of Ford.

Here are some of the good points at Ford:

  • They’re still doing great with trucks
  • They have $258 Billion in assets, with about $34 billion in cash and short term investments.
  • I think the Mustang Mach E will be a hit and will be a key vehicle for saving their ass in the EU and Chinese market.
  • The share price is at 2009 levels, where then they had much lower revenue. And the company is in much better shape today than in 2009 I think.
  • They pay a 15 cent/quarter dividend and they are bringing in more than enough cash flow to keep paying it.
  • Lincoln’s latest designs seem to be successful
  • With FCA merging with PSA, Ford and others may be able to steal some sales from them while management at the newly merged company focuses on merger integration activities. In my past observations, big mergers like this usually hurt the company for 1-3 years after it happens before the benefits start happening
  • With GM “cutting their way to success”, it’s another opportunity for Ford and others in Australia and other markets they are pulling out of.
  • With Nissan/Renault in crisis, it’s another opportunity for Ford and others to steal sales from them

Here are some worrying points

  • I think the main reason why shares are down is because Q1 earnings are expected to be bad... partly due to the Coronavirus thing
  • They have a lot of debt... over $100Billion... though most is tied to Ford Credit. $13 billion is tied to automotive.
  • This ‘cancelling all cars’ thing in North America doesn’t seem to have helped their profitability and margins as was claimed. It did help them to lose market share and revenue though.
  • While the Mustang Mach E and their other projects sound promising, there is no getting around the fact that they are still at least 5 years behind Tesla, just like most other car makers. And combine that with CO2-related regs in places like the EU and China, it means Tesla will continue to grow their market share... and THAT means other car makers, including Ford, are at high risk of losing market share.
  • EU emissions... They have to meet 95g/km for 95% of their lineup in 2020... and that same emissions level for 100% of their line in 2021. That suggests that 2020 will be the last year they sell the V8 Mustang in the EU. Hell, they’ll probably have to drop everything that has a gas engine bigger than the 1.5L Ecoboost as well as their more powerful diesels... either that or pay massive fines. To keep a car like a V8 Mustang on sale in Europe, they would have to raise the price by at least 20,000 Euros to cover the CO2 fines. Here is some info on the EU CO2 emissions regs:

Anyway... here’s a Shelby Mustang Mach E for your thoughts:

Illustration for article titled Oppostocks: Sold TSLA a while ago, thinking about Ford

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