“F” – Ford Price Target $50!!!!!, “TSLA” Price Target $500!!!! – SECOND UPDATE via /r/wallstreetbets #stocks #wallstreetbets #investing


“F” – Ford Price Target $50!!!!!, “TSLA” Price Target $500!!!! – SECOND UPDATE

This is the second update to my previous post. I have added two more sections. Debt and EV strategy

Debt

Ford debt on their balance sheet that appears under long term debt heading is actually “NOT DEBT” that huge debt figure is the lending arm of Ford which essentially means:

  1. Ford lends people to buy cars and people pay them interest and principal over period of agreed terms.

  2. This debt is the same as banks asset where in a bank makes money on interest payments Therefore, Debt in their balance sheet is long terms loans that ford made, and best part is in the high interest rate environment Ford is going to make more money in interest payments more than ever!!

EV Strategy

Ford Ev strategy is fierce and aggressive. Jim Farley understands that he needs to beat Tesla no matter what. He poached the best people from Tesla who have spent over a decade in tesla to ensure that Ford designs and builds better ev cars. He is partnering with chip manufacturing firm Global foundries to get a better deal on chips. Surprisingly ford has partnered with Google in lot of skill building projects. It is possible that we may see a future partnership between google and ford for their EV software. Jim knows that they need a software partner to optimize their designs and builds.

Previous Post

· Product Line

Tesla have limited product line when it comes to EV’s, their most popular one model 3 and Y whereas Ford has better product line both in Consumer and Commercial including MachE, F-150 lighting and commercial EV vehicles. Ford is racing ahead in the commercial EV line and already has contracts with Walmart and others. Ford has the capability to deliver the commercial vehicles in 2022 -23 to businesses.

· Margins

Tesla’s biggest strength is their margins -Gross margin – 30%, Net Margin- 15% – 17%

Ford has lower margins (Gross – 15%, Net -8%) because they have lived in the old ICE (Internal Combustion Engine) world of lower margins However that’s changing and will change the path of Ford history of margins. The new blood in Ford has learned to focus and reduce the margins from Tesla itself and they are working to reduce cost and increase margins. Most likely they will take margins to next level in 2-3 years.

· Valuation & Market Share

The most controversial point that has jaded the most of us. Tesla has 900 billion valuation vs Ford’s barely $79 billion valuation. Given that Tesla’s revenue of 2021 – $53 Billion vs Fords $136 billion revenue. Ford being veteran and a value stock with dividends has been given lowest multiples of PE , Price to share for years because people never thought that they would change or start a new product line, That’s changing now!!

Tesla has 70% market share in EV market and Ford with 5% but that’s about to change drastically. In a matter of couple of years Tesla will loose their ground in EV landscape and Ford will increase its market share to over 15% with their aggressive line of EV’s

· Moat

Tesla had the moat with its manufacturing batteries, EV’s and automation. With time and effort that’s diluting and other auto manufactures have been able to manage to produce EV’s and batteries and eventually they will reach to automation as well. Ford is in the best position to beat Tesla in terms of higher quality EV, batteries and automation.

· Marketing

Tesla resonates with urban people and millennials which is good but Ford being 100-year-old firm comes with huge brand name and solid loyal customers. Fords new line of EV marketing and advertising has already done excellent job and proof is that they have over 270,000 orders within an year!!

· High Interest rate Environment

We are moving in high interest rate environment with global rate increases. Tesla is still labeled as growth stock in portfolio baskets and Ford has value stock label for decades. Ford has been rewarding shareholders with dividends. This high interest rate environment is better for Ford and Tesla will see winter.

· Team

Last but not the least. Obviously, Tesla has proven for years being a solid team of technologist and path breakers under musk leadership. Ford’s new CEO Jim Farley is best CEO ford has got in over several decades. Jim has clarity of vision and can execute that vision with smart and effective decisions. Within period of an year or so, he has taken steps to transform Ford to be a New age Auto manufacturer.

Submitted February 10, 2022 at 05:25PM by Changemaker005
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