Ford Motor Co. (F) has surged to a 20-year high in the first week of 2022, joining rivals Tesla Inc. (TSLA) and General Motors Co. (GM) in the momentum wave generated by the electric vehicle revolution. It now stands atop the SP-500 performance list for the first time this century, marking the next step in restoring its diminished reputation. However, the rally seems premature, with December U.S. sales dropping 17.1% year-over-year from 2020’s depressed levels.
Industry-Leading Fourth Quarter
Admittedly, Ford was also America’s best-selling automaker in the fourth quarter, with 508,451 vehicles marking a 16.8% increase over the third quarter. Overall industry sales fell about 3% in the quarter, yielding a strongly bullish divergence that highlights growing interest in the company’s new product line. EV sales contributed to this sales burst, growing 36% faster than the broad segment in 2021 while hitting December and full-year sales records, with 121% annual growth.
The all-electric F-150 pickup is capturing consumer and Wall Street attention, with Ford announcing this week it will double production due to strong demand. The company had shut down reservations for the truck to deal with an “overwhelming response” and has now started to accept purchase orders once again. In addition, customers who already placed reservations will receive invitations to convert those requests into actual orders.
Wall Street and Technical Outlook
Wall Street consensus has deteriorated in the last 12 months, now standing at a ‘Moderate Buy’ rating based upon 11 ‘Buy’, 2 ‘Overweight’, 6 ‘Hold’, 1 ‘Underweight’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $12 to a Street-high $26 while the stock is set to open Thursday’s session less than $3 below the high target. This lofty placement suggests recent gains are unsustainable, which makes sense with industry sales still below pre-pandemic levels.
Ford topped out in the mid-teens in 2013 and entered a steep downtrend that hit an 11-year low in March 2020. The subsequent uptick reached 20-year horizontal resistance in the upper teens in November 2021 and broke out, stretching in a straight line into the mid-20s. This price level marks strong resistance at the .618 Fibonacci retracement level of the 1999 into 2008 downtrend, raising odds for a long overdue reversal and pullback that tests new support.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.