Will Ford Reach $100?
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Ford has been one of the oldest automakers but is still a pillar of innovation in the auto industry. The current share price is $12.09 and $100 seems to be a mammoth target for the stock as it represents an absolute gain of 586.8% over time.
Latest Ford Stock News
- Ford will delay the production of its highly anticipated Explorer SUV in Cologne, Germany, by approximately six months. This delay is to wait for the latest generation of Volkswagen battery technology to become available. The production is scheduled to start in the summer of next year.
- In August, Ford Motor Co. sold a total of 161,300 vehicles in the United States, showing a 2.0% increase in sales.
Factors that Could Drive Ford Stock Price to $100
Ford has demonstrated robust financial performance in recent quarters, with the company reporting strong financial results. In the second quarter of 2023, Ford recorded a net income of $1.92 billion, showing a significant increase of 187%. This impressive financial performance has the potential to enhance investor confidence and contribute to an upward movement in the stock price.
Ford is making substantial investments in electric vehicles (EVs), allocating a budget of $50 billion towards EV development by 2026. The company plans to reach an EV capacity of 600,000 by 2023 and 2 million units by 2026. Ford plans to spend $50 billion till 2026 to grow the EV electric vehicle division called Model e. This strategic investment positions Ford to capture a substantial portion of the expanding EV market. As the EV market continues to grow, it is anticipated that Ford’s stock price will rise in parallel.
In recent years, Ford has witnessed improvements in its reputation. The company has received a commendation for its unwavering commitment to safety and quality. This positive reputation has the potential to attract investors and positively impact the stock price of Ford.
Will Ford Reach $100? Financials Required to Reach $100
The above discussion is more theoretical, let us turn it into some practical points. The basic formula for the stock price is EPS*P/E (Earnings per share/Price per earnings). The current price for Ford can be broken into 1.02(EPS)*11.81 (P/E) = $12.05. To reach $100, the components of the above multiple must increase to result in $100.
The EPS is projected to grow from 1.59 in 2021 to 1.87 in 2025. It turns out to be a CAGR of 4%. Considering the growth in the last year and the effect of catalysts discussed above, it is modest to assume a CAGR of 10%. Hence, EPS will be $2.32 by 2025 and $4.12 by 2031.
The current P/E ratio for the stock is 11.81. But, the P/E of other EV manufacturers like Tesla is 72.77. Because Ford is transiting quickly into EVs, it will not be a bad assumption for Ford to have a P/E of 25 by 2031.
Hence, multiplying $4.12*25= $103. It looks plausible that Ford will reach $100 by 2031.
Also Read: Ford Stock Forecast 2023
Factors that Could Derail the Growth of Ford Stock
Competition poses a significant challenge for Ford in the fiercely competitive automotive industry. The company faces tough competition from major automakers such as General Motors, Toyota, and Tesla. This intense competition could present difficulties for Ford in terms of maintaining its market share and subsequently driving up the stock price.
Additionally, an economic downturn or recession could adversely affect Ford’s sales and profitability. A decline in consumer spending during such periods could result in reduced demand for vehicles, impacting Ford’s sales volume and overall financial performance. Consequently, a downturn in the economy could lead to a decline in Ford’s stock price.
Will Ford Reach $100: Conclusion
It is not a question of if, but a question of when will Ford stock reach $100. It is a fact that Ford stock has underperformed the S&P 500 index for most years in the last two decades and it is nowhere near Tesla in terms of EVs delivery, but it is firing all cylinders to catch the EV train. F-150 lightning trucks are the most sold truck in the United States and Ford is providing cushion to its EV business with conventional vehicle profits.
The biggest disadvantage of Ford is its non-dominance in any particular segment or particular geographical area. Unless Ford does not dominate or does not take a major chunk of the market share of EVs, it will be impossible for its stock to reach $100, be it by 2031 or even 2040.
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Index or Individual Coins. Please consult a registered investment advisor to guide you on your financial decisions.