Ford V Ferrari - The Stock Race

Ford vs Ferrari movie zoomed past the competition, taking the top spot at the opening box office two weeks ago with an estimated $31.5 million, according to Box Office Mojo. The Disney drama overtook the competition, including Roland Emmerich’s Midway, which battled its way to second place this week with $8.5 million

Ford v Ferrari is not only going the extra mile with moviegoers, but there are rumblings of possible Oscar contender-ship for the drama directed by James Mangold and starring Christian Bale and Matt Damon.

The movie is about an epic battle between two automotive titans to win the 24 Hours of Le Mans. There was and is no more prestigious an achievement, as an automotive manufacturer, than to win this race. 

Ford set out in the early 1960s to campaign and win the Le Mans manufacturers championship. Ford hired legendary race driver and boutique auto manufacturer Carroll Shelby to create the racing team that would compete with and attempt to unseat the dominant Le Man competitor Ferrari.

I will try not to spoil the movie for you, but the competitive battle between manufacturing titans Ford and Ferrari is somehow comparable to what takes place in the stock market, where shares of Ferrari (RACE) are racing higher besides the competition of electric vehicle (EV) sports cars or by the 1966 loss to Ford:

Ferrari stock is up more than 65% year to date giving the ultra-luxury goods maker a market value of just under $30 billion, not far behind Ford's capitalization, of about $35 billion.

Ferrari doesn't offer an all-electric model. What's more, Ferrari doesn't seem ready to jump into the all-electric race just yet.

"I would say that, certainly, in terms of hybrid, there's been huge interest, especially since the launch of the SF90," Ferrari CEO Louis Camilleri said on the company's third-quarter earnings conference call. "So in all fairness, I think a lot of our customers have difficulty imagining a real Ferrari, which is fully electric. But they had the same skepticism for hybrid. And when they sold the SF90, I think it blew them away. So I'm quite hopeful that we'll be able to do the same with the fully electric car."

Ferrari is doing just fine in its niche. Contrary, these are challenging times for Ford (F) and other U.S. automakers. From management’s standpoint, Q3 2019 was a good quarter. However, the stock is still under pressure.

Ford stock has seen downward pressure for the last 2-3 years and up only by around ~30% over the last decade. The future still looks bumpy because of the government’s deadlines to meet environmental targets and the company's ongoing restructuring phase.

Ford is trying hard to regain the investor’s confidence by maintaining specific liquidity standards and expanding the electrical vehicle portfolio. But in the current scenario, many factors are going against the company:

• S&P rating cut - S&P downgraded Ford rating from BBB to BBB- (just one step above junk)
• Newer Ford models cannibalizing sales of older models.
• Management low earning guidance in the near future.

Stuck in a wide trading range of between $8 and $10 this year, Ford Motor is struggling to reward its loyal shareholders for believing in its tremendous upside potential.

"Failure is simply the opportunity to begin again, this time more intelligently." Herry Ford

In the meantime, Ferrari is Winning the Stock Race vs. Ford, aside from that treat yourself to this thoroughly entertaining movie this holiday season and be prepared for some trading inspiration.

All the Best, Enjoy the Movie and Happy Holidays !!