You can profit from my research and losses.
Ford is my stock recommendation. it is near the one year low, and pays over 5% dividends. I have lost a lot of money on it, watching it sink as if it was a doomed company. This month’s sales are 7% down from last year. Well, last year was the highest on record. Overall 2017 is a good year for them. Today the Tesla Motors stock market cap passed Ford. Tesla is now worth $48 billion, and Ford is worth $45 billion.
Tesla: $7 billion/year vs. Ford: $150 billion/year (21 times larger)
Tesla $0.7 billion loss (10% loss) vs. Ford: profitable
Tesla: approx. 100,000 cars/year, one factory vs. Ford: 3,200,000/year, factories in dozens of countries (32 times larger)
Ford sells products all over the world to the masses. It has always been a cyclical company, as it cannot escape the overall financial state of its customers. Tesla is a luxury goods supplier, and is fairly immune to the general business cycle.
There is nothing seriously wrong with Ford, other than they are an old company with lots of pensions to pay, as automotive companies became paternalistic and rather socialist. Their product line has been steadily upgraded. They just came out with an aluminum F250 truck, which is the largest selling commercial and utility truck. That business alone would make them a large company.
Tesla is a full of hot air company. They have never shipped a mass-market product. They lose money every year. They pay no dividends. Since they have no previous track record they can tease about a fabulous new product without disrupting the sales of their existing products. In the software field we call this advertising of a non-existent product “vaporware”. Since Elon comes from the software industry he has adopted the same tactics, that of promising a perfect new product that is always a little late, except that it turns out to be a lot behind schedule.
Tesla has no service network to speak of and cannot possibly supply all the parts and repairs for the 500,000 cars they plan to build by the end of next year. When people have a luxury car they don’t put a lot of miles on them; that doesn’t tax your repair and parts capabilities, because the average wealthy person has many cars, and travels around the world so much they drive their cars little, not to mention having multiple homes so the miles driven per car is very low. Compare that to a commuter or contractor who beats the hell out of their single vehicle. Did you know the average age of a pickup truck in the USA is close to 20 years old? Ford will be a huge company for decades to come simply from selling replacement trucks.
Tesla is a software company, and that is Elon’s great strength. As cars become more software oriented, Elon’s company will do well. Ford and GM have really lousy programmers, have never paid attention to it before. So they will struggle in this transition. however, you can always buy software from a 3rd party, and it isn’t hard to run new software. Don’t like your autopilot vendor like MobileEyes which got fired from Tesla after the crash? Just buy a program and run it on the same computer.
Once you enter the mass market as Elon is planning to do, their cars will get dented and scraped, and the need to supply parts and service will skyrocket, and since Elon hates dealers (refuses to have a dealer network), his antagonistic attitude towards third party vendors will bite him in the ass. You simply cannot deploy mass quantities of a product without a dealer/service network. This is how Citroen, and the French totally failed in the USA. They didn’t build a network of quality dealers. I have no love for auto dealers, and their ripoff attitudes, but it is a fact that the parts warehouse of Honda in Reno, can get any part for any car in 24 hours to anywhere in California.
There are numerous stories on the internet of people waiting months for a Tesla part. if that was your only car you would be furious.
People are irrationally pounding on Ford, and over-optimistic on Tesla. I doubt you can get 5% on a bond which is only going to go down as interest rates creep back up. I expect people to stay pessimistic on ford until the model 3 is late, as it inevitably will be. Any one missing part will stop his assembly line, and ramping up by a factor of 10 always has unforeseen challenges.
also, i am calling peak apple, the minute they fill up their spaceship building with employees (which should happen around September), they can shut the doors because no new idea will get out the door, because no new idea will be worthy or sufficiently important compared to the majestic building it came from.