Ford Motor (F, Financial) stock is hitting the brakes, falling nearly 4% on Monday after Jefferies downgraded the automaker to “underperform” from “hold.” The rating cut, paired with a price target slash from $12 to $9, points to serious headwinds ahead. Jefferies flagged swelling U.S. inventories—now at a bloated 96 days—as a red flag, alongside warranty costs that have outpaced cash outflows by $8.5 billion since 2020. The analysts also raised questions about Ford's European operations, warning that tough strategic decisions could further weigh on the company's financial health. Year-to-date, Ford's stock has dropped 18%, while its rival, General Motors (GM, Financial), has cruised ahead with a 45% gain.
But it's not all doom and gloom. Ford is going all-in on electric vehicles, fueled by a $9.63 billion loan from the U.S. Department of Energy to fund its BlueOval SK battery venture with SK On. The project is massive—three plants in Kentucky and Tennessee, aiming for production by 2025—but it won't deliver quick wins for investors. The near-term outlook? Uncertain. Even with solid EV progress, Jefferies remains bearish, citing inventory overhang and structural cost concerns. On the flip side, Argus Research sees opportunity, betting that Ford's streamlined operations and focus on cost control will drive profitability over the next few years.
For investors, the message is clear: Ford's road to recovery is riddled with potholes. While long-term EV ambitions might shine, the present is defined by swollen inventories, financial overhangs, and tough decisions on the horizon. If you're holding Ford stock, buckle up—it's going to be a bumpy ride.
