Ford’s Stock Up On Electric Vision, But Will It Sustain?

by Trefis Team
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Ford
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Ford’s stock (NYSE: F) has risen by 14.8% from $12.11 to $13.90 over the last five trading days. In comparison, as per Trefis, Ford’s Valuation is $13 slightly below the current market price. The broader S&P500 rose by 1.9% over the last five trading days. Ford’s stock witnessed a surge in share price after Capital Markets Day where Ford outlined its Electrification revolution. The company will be accelerating its electrification investment to more than $30 billion by 2025 and expects 40% of Ford’s global vehicle volume to be electric by 2030. They will also invest in battery technology by creating a “Ford Ion Park which will serve as a global center of battery excellence comprising more than 150 experts in battery chemistries, testing, manufacturing and value-chain management.”

Will the company continue its upward trajectory over the coming weeks, or is a fall in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using twenty years of historical stock data, returns for Ford’s stock average around -1.6% in the next one-month (twenty-one trading days) period after experiencing a 14.8% rise in a week (five trading days). Further, the stock is likely to underperform S&P500 returns by 6.2% over the next month (twenty-one trading days). But how would these numbers change if you are interested in holding Ford Motor’s stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Ford’s stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF F stock moved by -5% over five trading days, THEN over the next twenty-one trading days, F stock moves an average of 1%, which implies an excess return of -0.4% compared to the S&P500.

More importantly, there is a 51.7% probability of a positive return over the next twenty-one trading days and a 41.4% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of Ford Motor Stock Movements

Question 1: Is the average return for Ford Motor’s stock higher after a drop?

Answer:

Case 1: Ford Motor stock drops by -5% or more in a week

Case 2: Ford Motor stock rises by 5% or more in a week

Is the average return for Ford Motor stock higher over the subsequent month after Case 1 or Case 2?

F stock fares better after Case 2, with an average return of 1% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.5% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Ford Motor’s stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Ford Motor stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For F stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Ford Motor after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

F’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Ford Motor’s stock by changing the inputs in the charts above.

While Ford stock may have moved, it is helpful to see how its peers stack up. Check out Ford Peer Comparisons to see how Ford compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

See all Trefis Price Estimates and Download Trefis Data here

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