Ford Motor Co. shares traded below $9 on Tuesday for the first time in more than six years, a low point that experts blame in part on the Dearborn automaker's reluctance to share a detailed map of its future.
The stock price slumped 3.4 percent Tuesday to close at $8.95 per share. Blue Oval stock hadn't closed below $9 per share since August 2012, when it hit $8.92. The stock is down roughly 28 percent this year, and is off about 20 percent since CEO Jim Hackett ascended to the top job in May 2017.
Wall Street might be punishing Ford, experts and company officials say, but that doesn't amount to a crisis. Automakers in general are falling out of favor with investors as U.S. sales figures continue to flatten, vehicle prices increase and ongoing trade wars add uncertainty to the mix.
U.S. auto stocks were down across the board Tuesday, on a day the Dow Jones Industrial Average declined only two-tenths of a percent: Crosstown rival General Motors Co. closed down 4.64 percent per share, and is off more than 20 percent this year. Fiat Chrysler Automobiles NV was down 0.9 percent, off 7.86 percent for the year.
"Everyone's sensing some level of contraction," said Karl Brauer, an auto analyst with Kelley Blue Book. "It's ironic because the economy seems to be as good as it could be.
"What’s unique to Ford is I think they’ve been more challenged in long-term assessment planning. The average investor hasn’t got the same level of confidence (in Ford) as other manufacturers."
Perhaps adding to Tuesday's selling pressure: Jim Cramer, a prominent investor and financial-TV personality, on Monday told CNBC that Ford has "to close everything that they're not profitable in. Ford has to become a small company. In the New Economy, Ford's not working. So I say, 'Don't buy Ford.'"
In a statement Tuesday, the automaker defended the actions it is taking to redesign the business — and how long it's taking to execute them during an extended period of profitability.
"As we have said before, the entire company is moving with a sense of urgency and taking proactive steps to redesign and restructure the business," spokesman Brad Carroll said. "We will capitalize on our strengths, bolster underperforming products and regions, and selectively and smartly disposition where we cannot make an appropriate return. We’re confident that over time, the market will recognize our progress."
Ford is profitable, thanks chiefly to a North American business undergirded by its best-selling F-Series pickups and an expanding portfolio of SUVs. It's also sitting on a pile of cash, totaling $16.8 billion at the end of the second quarter, and another $19.6 billion in marketable securities.
Ford's real problem right now is the stock price, said David Kudla, CEO of Grand Blanc-based Mainstay Capital Management LLC, and convincing investors it has a future in Auto 2.0. Ford's shares are floundering because company officials have yet to telegraph clearly the company's plan for autonomous vehicles and its restructuring.
"This is not 2008," Kudla said, referring to the troubled macro-economic environment Ford and its rivals faced a decade ago amid the global financial meltdown. "This is not 1992. There's no crisis at hand here. This isn't a financial crisis for Ford. They have time to do this methodically and do it optimally. What we still want to see is more of that articulation. More of that messaging of their strategic plan."
Executive Chairman Bill Ford Jr. conceded as much in late September. He said the company was "not even close to a crisis," but said there is work to do. Tuesday's blow to the stock price comes after consecutive announcements Friday and Monday partially detailing ongoing plans to restructure.
On Friday, Ford officials said they expect cut an undetermined number of salaried employees around the globe as part of an effort to flatten management. Ford then announced Monday it would shave $150 million per year by way of a new marketing deal with New York-based BBDO.
Coupled with previously announced streamlined product development and partnership talks with Volkswagen AG and Mahindra of India, the moves are part of company-wide cost-cutting efforts. The automaker is undergoing an $11 billion global restructuring and a $25.5 billion operational cost-cutting push.
Aside from assurances that Hackett and his officials are making changes, Ford hasn't been nearly as as specific as Wall Street historically expects from traditional automakers. And the company has yet to give details about its autonomous vehicle platform and the business model for those vehicles.
The lack of detail is exacting a price, said Kudla: "Where is the company going and what people can invest on? You see a lot of that at GM. Investors are looking for more of that detail from Hackett and from Ford."
Most auto stocks started the fourth quarter of the year on a weak note due to flat sales and growing trade tensions between the United States, China and the European Union. Late last month, Hackett said he expected President Donald Trump's tariffs to cost Ford $1 billion in profits over the next year.
Ford's stock dip comes just more than a month after Moody's Investors Service downgraded Ford to its lowest investment-grade rating, calling the company's outlook "negative."
The ratings agency said the downgrade came amid "the erosion in the company's global business position and the challenges it will face implementing its Fitness Redesign program." The new Baa3 rating, considered a risky investment, is one grade above Moody's rating for junk bonds.
Moody's said then that Ford should take aggressive actions — like the company's decision to ax all its sedan models — while it posts strong North American profits and has strong liquidity. But it will take several years for benefits of a restructuring to materialize, Moody's said.
Ford said Friday that any plans to cut salaried workers wouldn't materialize before the second quarter of 2019. The automaker is just a few months away from a new-product rollout that should add a cache of high-profit vehicles to its lineup. By 2020, Ford wants nearly nine of every 10 vehicles sold in the U.S. to be a truck, van or SUV.
The automaker has also pledged to launch its first fully autonomous vehicle without a steering wheel, brake pedal or accelerator by 2021.
But if Ford officials want to improve the stock price — Bill Ford and the Ford family have huge portions of their personal wealth tied to the stock — the company needs to give investors and other constituencies a clearer picture of its future, Kudla said.
"This stock price discounts the future," he said. "That's what people are looking for: What's the future at Ford?"