Ford (F) will hold its Investor Day on May 26. The stock has been strong in 2021 and is up almost 50 percent YTD. Ford is among the top 20 gainers in the S&P 500 Index. At Investor Day, markets will be waiting for a lot of updates from the company, especially on the recently launched F-150 Lightning, the global chip shortage, guidance on profitability, and possible dividend resumption.
Legacy automakers including Ford, General Motors, and Volkswagen are outperforming their pure-play EV (electric vehicle) peers in 2021. However, despite the sharp gains in 2021, their valuation is nowhere near that of EV stocks. For example, Ford’s market cap is only about $5 billion higher than NIO.
Ford F-150 Lightning
One of the reasons legacy automakers have outperformed in 2021 is the acknowledgment that they aren't exactly “dinosaurs” like many EV bulls believed. The specifications of Ford’s F-150 all-electric Lightning model are another testimony to the thesis.
The model has been received well by the markets and even President Biden admired it. Several brokerages including JPMorgan Chase and RBC are impressed with the model, which would start at just under $40,000. The model would compete with Lordstown’s Endurance and Tesla’s unconventional model the Cybertruck.
Ford Investor Day: Expect details on the F-150
During Investor Day, Ford might provide more details about the F-150 Lightning. The company has already said that it expects the model to be profitable. Analysts might pressure management for more granular details. The ICE (internal combustion engine) model of the F-150 has been America’s best-selling pickup for decades and is widely believed to account for the bulk of the company’s profitability.
Ford is possibly the worst affected automaker amid the global chip shortage. During the earnings call for the first quarter of 2021, Ford said that it expects to lose almost half of its second-quarter production due to the chip shortage. Ford is grappling with a fire at a supplier’s facility and expects the chip shortage to wipe off almost $2.5 billion from its pre-tax profits in 2021.
During Investor Day, markets would await more details on the chip shortage situation. Previously, Ford said that the chip shortage would get better in the second half of the year. It still expects to lose 10 percent of its second-half production due to the chip shortage.
Analysts might watch out for details on Ford’s guidance during Investor Day and question management on how it's trying to manage chip supplies. The company might also provide more granularity on its autonomous driving platform. Earlier this year, Ford doubled the outlay for vehicle electrification and autonomous driving.
Ford might discuss the dividend.
Ford suspended the dividend in 2020 as the COVID-19 pandemic took a toll on its earnings. General Motors also suspended its dividend. Later, Ford said that it would make a decision on the dividend in the spring of 2021. Surprisingly, the question of dividend resumption didn't crop up during the earnings call for the first quarter of 2021.
During Investor Day, the company might provide the roadmap for dividend resumption, which a lot of retail investors have been awaiting. The company would have to take into account the lower earnings in 2021 due to the chip shortage and its increased capex budget before announcing dividend resumption.
Volkswagen Power Day
Earlier this year, Volkswagen held a “Power Day,” which was similar to Tesla’s Battery Day. The event supercharged Volkswagen stock and investors approved of its vehicle electrification plans. Ford might also need to do something similar to help a further rerating of the stock.