Ever since it beat back expectations of bankruptcy, Ford’s stock has been on fire, pushing the Blue Oval to the highest market capitalization of the Detroit automakers. Then, on Friday, when Ford announced its best financial results in over a decade, investors mysteriously sent the stock tumbling, pushing GM’s market cap higher than Ford’s for the first time since its government-ordered restructuring. How did that happen? Even with the one-time expenses Ford blamed for its Q4 drop in earnings, analysts expected Ford was expected to earn $2.05 per share… and analysts punished the automaker for making only $1.91 per share before special items and $1.66 after same. Since markets re-opened today, Ford’s market cap has gone on to $55.39b while GM has dropped back down to $54.73b, suggesting that GM’s stock price has been corrected downwards relative to Ford’s disappointing financial performance. Still, despite greater European-market problems, GM’s strong Chinese-market position will keep The General hanging just behind Ford waiting for the upstart automaker to stumble again.
What are Ford’s plans regarding China?
Just from a technical perspective, Ford’s RSI was pretty high before the crash. This is a good indicator that Ford was due for a major correction. The situation wasn’t helped either by the fact that Ford’s stock tumbled below its 50 day moving average which would have set off automatic sells for many institutional investors who have their portfolios running on autopilot. Thus pushing the stock further down. I think also people wanted an excuse to take their profits. Ford’s near miss in earning expectations provided alot of people with a reason for taking profits. If I still had the shares of Ford I bought at $9.90 I would have sold them the second I heard that Ford had missed analysts’ expectations.
Ford got hit again today. Anyone know what is really going on?
The problem is too many investors not caring about about fundamentals. They care about buying Ford for a nickel and selling it tomorrow for $12.50. And they panic like a stuck rat if it doesn’t. Who are we going to blame for that mentality? Me, I say Netscape, but that’s only because it was the first time I saw a bubble start.
It’s called buy on roumor/whisper – sell on news. It makes little sense but it plays out over and over again.
GM is back to it’s old ways, the stock tanks once the banks finish playing games. Ford is the real deal.
I’m in for the long term, I think F will hit 25 next year as their positioned well for tight gas prices. It is disheartening to see the price get savaged in 3 days of trading. I’m still in the black on it so I’m staying put.
I think a lot of people saw 18 as the bailout point anyway.
I agree.
I’d bet a lot of people who bought F at $1 – $3 on their e-trade accounts set the automatic sell at $20. Once the stock tickled $20, they got cashed out. I’m holding on, if for no other reason than I don’t need the cash or the tax hit right now — and I’m betting it goes even higher. $25 – $30 a year from now sounds very good – and very likely – to me.
From now on, I expect all my stocks to beat analysts’ expectations by more than I expect them to.
Seriously, this is the kind of logic people use. I’m not even joking. I recall Google beating expectations, but there being a sell-off, because Google was -expected- to beat expectations by -more-.
Those who argue that laissez-faire capitalism is the definition of efficiency might want to update their models to reflect the fact that investors are not – as is almost always assumed – rational. They might discover some things they don’t expect.
It’s got to be a conspiracy. No way that GM is worth more than Ford. Obama’s minions are up to no good, I tell ya. You know, just like they did with the Toyota UA. It’s a conspriacy, yea, that’s the ticket!
The sad this is that I couldn’t tell whether or not you were joking until I got to “I tell ya”…
I don’t quite know what to make of this, as I wish evil on no one, certainly not Ford. This is typical as stated above. The stock market for too many has become one big get-rich-quick scheme. It used to be you invested in a company over the long haul because you believed that they would actually strive to consistently better themselves and grow. Also, so you could either gain additional retirement income from dividends or pass on the stock to your children as a ready investment. Now? Greed is truly good, the system is racing to the bottom, so get all you can while you can. It would be nice if I were wrong, but something tells me I’m not. I’m sure Ford stock will recover somewhat.