Is Ford a Company in 2022? | Daily News Byte

Key takeaways

• Ford has shifted to focus on electric vehicles, and investors like what they’re hearing.
• Finances are strong, apart from losing money on start-up Rivian.
• Ford’s outlook is bright as long as investors can remain patient in the short term.

Ford stock is on a big rise in 2021, up 136% as investors cheer the automaker’s plans for new EV vehicles. In 2022, Ford stock performed worse, down 44%. Part of this is due to the increase in 2021, and another factor is the weak stock market due to global economic conditions. Still, Ford is positioning itself for the future. Here’s where Ford stands today and its plans to remain profitable in the coming years.

Ford’s changing priorities

Ford has been building vehicles to meet the needs of consumers since its inception nearly 120 years ago. The manufacturer is known for producing economical vehicles for the average consumer, apart from the occasional stand-out such as the Mustang.

It brought back the Bronco and Maverick nameplates to its lineup and found that buyers were eagerly lining up to get their hands on these vehicles. They are even willing to wait for their orders during ongoing manufacturing delays. However, Ford’s entry into the EV market has caused its star to rise again; it also forced some difficult decisions to close unprofitable operations around the world.

Ford, along with other major American automakers, has watched the massive rise of Tesla’s all-electric vehicle change how consumers view their transportation and its impact on the environment. However, consumers want to buy EVs made by their favorite manufacturers and drive familiar vehicles. Ford’s successful introduction of the F-150 Lightning demonstrates pent-up consumer demand for an EV pickup truck that can perform as well as its traditional gas-powered counterpart. It also shows Ford’s ability to understand their customers’ desires for a conventional vehicle design combined with cutting-edge technology.

Another cost-cutting move that reflects Ford’s changing priorities is the closure of two assembly plants and an engine factory in Brazil. This action took place in 2019, but it revealed the beginning of a restructuring strategy to end the production of sedans and leave the Brazilian market. Ford’s production in Brazil cost the company over $11 billion over the past decade before they ceased operations in the country. The decision to close these plants means Ford no longer has to shore up its unprofitable divisions, allowing the company to divert cash to more profitable ventures like EVs.

Analysis of Ford’s consolidated income statement

On June 30, 2022, Ford Automotive reported revenues of $37.90 billion for the second quarter of fiscal year 2022 and a total of $70.20 billion for the first half of fiscal year 2022. This represents an increase from to $24.12 billion and $57.68 billion respectively in the same quarter in the 2021 fiscal year.

The Ford Credit division reported lower revenue at $2.56 billion for the second quarter of fiscal year 2022, compared to $2.60 billion for the second quarter of fiscal year 2021. Its mobility division increased to $25 million in the current quarter, from $21 million in the same quarter of fiscal year 2021.

Ford’s revenues reached $74.66 billion at the end of the second quarter of fiscal year 2022, but the company suffered a net loss of $2.44 billion and a comprehensive loss of $512 million for the second quarter of fiscal year 2022. For the first half of the 2022 fiscal year, Ford had a comprehensive loss of $3.57 million after taking into account costs and expenses. Most of the losses can be attributed to the loss of value of Rivian, a car manufacturer in which Ford has a 12 % stake.

Ford balance analysis

At the end of the second quarter of fiscal year 2022, Ford reported cash and cash equivalents of $19.51 billion, down slightly from $20.54 billion from the same period last year. It also reported $30.71 billion in financial receipts, down slightly from $32.54 billion in the second quarter of the 2021 fiscal year. Ford’s total liabilities and equity at the end of the second quarter of the 2022 fiscal year were $245.75 billion, down from $257.03 at the end of the same period last year.

Outlook for Ford stock

Ford is looking to the future of transportation and is taking steps to retool its production of vehicles to stay relevant. Consumer demand for its EVs, especially the Ford F-150 Lightning, is strong and doesn’t appear to be slowing down anytime soon. Auto industry analysts are predicting a sales decline for 2023 due to overproduction while supply chain shortages and the strain on chip production. This could lead to a temporary depression in Ford’s stock price, even though there is demand for the production of its EVs.

Currently, EV production is a small fraction of Ford’s total output. Gas-powered vehicles still drive Ford’s profitability because EVs are still impractical for most consumers. Initial demand for EVs may dry up due to a lack of consumers who can charge an EV at home.

Federal and state governments have yet to develop much in the way of plans to improve car charging infrastructure — something crucial to widespread adoption of EVs. Ford needs to balance its production of gas-powered vehicles with EVs to meet consumer needs; It remains to be seen if Ford is aware of these issues.

Over the past year, Ford’s stock price has continued to decline, investors haven’t flocked to buy its stock, but the company is showing it can pivot toward the future and give the auto-buying public a such desirable vehicles.

The bottom line

When it comes to the production and sale of vehicles, Ford is a profitable company. Their investment in start-up Rivian has turned their bottom line into a net loss in the current financial year. If investors can remain patient, Ford has a lot of positives going for it. Current CEO Jim Farley continues to wind down operations where the company is losing revenue and put that money to work where there is profit. Additionally, as Rivian works through its growing pains, Ford’s investment in this EV maker could pay off handsomely in the coming years.

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