F— short term Bear long term Bull

First and foremost this is my first attempt at DD here. But should be easy as it’s something I know well as it pertains to my actual job not my free time job. Any feedback is appreciated.

F in the long term has a great business model and is focused on future growth into the EV segment. Devoted tons of resources to the EV sector and development. The short term bearishness comes from their lack of production capability and subpar product launch.

Going back as far as 2020 the product launches have been suspect at the least. 2020 explorer launch failed miserable with several issues prior to delivery to retail facilities. That resulted in delays and many mechanical issues for consumers that actually received them.

The next major launch was the 21 F-150 again great product but supply issues continue to this day to be an issue. Following that up was Mach E fords first venture into the EV sector. They created E-commerce reservation platform for the Mach E launch. Consumers could reserve and build their Mach E right from their couch similar to Teslas business model. What was unknown at this point was the wait time or production holdups. The next launch was the bronco which everyone was waiting years for the launch. Over 160k reservations were made with production projected at 125k. Semi conductor shortages and hard top supplier issues have pushed much of that production from 2021 model year to 2022. I personally know of the 50 orders I know of only 3 have been filled this started in July of 2020 when reservation bank opened.

The next launch was the maverick as most are probably aware this is a huge volume play for F. Small truck like no other exists. Starting at low 20s selling price comes with 2.0L or 2.5L hybrid. Over 100k reservations have been submitted which exceeded F first year production targets. In fact the Hybrid model is no longer orderable.

On to the F150 Lightning the first venture into the truck EV space. Yet another incredible product however initial forecast was to build 75k. As announced they double their production targets to 150k. Which has led to a steady climb in the share price. The bearish aspect of this is they have continued to meet demand on previous released product and have not hit earnings projections for nearly 2 years.

Recently announced dealer inventory reframing will only allow dealers to stock certain trims and motor combinations. Anything outside of that will be retail ordered.

As many manufacturers fight supply chain semiconductor issues. Ford has long been behind the industry for production adjustments to account for large demand always reactive as opposed to proactive.

In closing incredible product is out and in the pipeline but for 2022 it’s going to continue to struggle to post substantial profits until manufacturing can keep up with demand. This is not a new issue with new products this has been ongoing issue for several years even before supply chain disruption.

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Good info, thanks for sharing. So, in short, you believe current upward price movement based on EV news is too much too soon and it will come back down in the near term, potentially around next earnings, due to supply issues, before continuing long term upwards movement?

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Correct. It’s currently riding the EV wave with over promised production that has yet to have been met on previous launches. I suspect once they get production and supply issues dialed in Ford will be the leader in EV space as it has been in automotive segment in general since the Model T

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My Buddy works at a plant that builds headlights for American cars and so far they haven’t gotten any word on a contract for the new Ford EV’s, yet they’re still producing for other Ford models. Just sharing.

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It’s already bad enough that EV’s are the most unreliable vehicles you can buy, but if Ford goes on to produce EVs at the level of quality they currently have given everything else that’s come off their assembly lines in the past three decades then then it’s going to be a shit show.

And for this reason, puts on Ford will always be appealing to me. I don’t think right now that it should be worth more than $10 a share. And that’s being generous.

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I disagree but we will find out for sure in February after earnings.

I’d expect Q4 earnings to be less than Q3 due to softened demand. Lack of inventory and end of year supply issues not just semi conductors. Also a major recall of Bronco hardtops that had over 100k produced that had to have all new hardtops. Which is a costly recall.

I think their supply chain and cost struggles are worse than they’re letting on. Not as bad as PTON, but noteworthy. Here are a few observations. I reserved a Mach E in September. I should be getting delivery in March. That lead time is typical. Since placing the order the cost has gone up by $2k (expected). But this week smart people on forums found an unexpected change - they silently removed two features from 2022 models: hands-free liftgate and acoustic laminated front row glass. It appears to have been done very last minute, and we’re not sure if it’s shortage related or cost driven. Either one is not good, in my opinion.

source: https://www.macheforum.com/site/threads/ssm-50415-hands-free-liftgate-deleted-from-2022-mach-e-built-on-after-jan-3.13628/

Additionally, a small sample size survey suggest the cars with BlueCruise (Level 2 self driving) are further delayed. This would be related to higher end CPU and camera chips.
source: https://www.macheforum.com/site/threads/january-2022-production-cars-some-completed-other-delayed.13647/

I’m still very bullish long term and very horny for this Mach E. But I don’t think their supply has hit an inflection point to start matching demand yet.

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The AWD option for those seems crazy to me for $3k only to get less range and a slower 0-60.

I have personally had a bronco on reservation and order since last February and finally scheduled. Will arrive in April sometime. I think global manufacturing as a whole not just the automotive industry will have significant earnings problems. Keep an eye on CAT earnings this week as a key indicator

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As of today, many folks with Mach E orders in my production week (640ish cars) are being told that production is now on chip hold. Usual disclaimer that this is just one small data point.

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That sucks! They have announced that Thursday this week will be last day to order a maverick for 2022 model year and orders won’t resume til summer for 2023 model. I believe they have over sold their capabilities with so many new model launches in last year in the midst of global supply chain issue. Micro chips etc. again my opinion that long term product demand is insane. But they have to figure out how to meet production needs.

All pending Mach E orders have just had ETA pushed out 3 months. Seems like 3k-5k unfinished cars on the production line, now moved to storage. What is strange to me is that they went ahead and scheduled so many builds. Most likely F either had a supplier surprise them with another shortage, or they’ve reprioritized components for other product lines.

I was searching for Maverick numbers - not a lot of data. Orders seem to be 20-40% of F-series volume. With that already being shut down, agree they are way overselling.

I don’t think this ER will be the end of the bear run. I think after TSLA earnings there is enough negative sentiment in the run-up to make money scalping puts and likely after. But will likely not be holding through ER. Tired of getting IV crushed.

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I can verify this. Several vehicles have been put on “chip hold” again which hadn’t happened since mid last year. One of F major semi conductor suppliers in Korea had been on an extended shutdown due to Covid outbreak could be leading to even tighter supply on semi conductors. As Powell mentioned the other day the chip supply chain most likely won’t see any major relief til 2023 the following day Bill Ford agreed with him.

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Not seeing any news in the media on production stoppage, so I wanted to do some more digging. Am I just too sensitive to the Mach E situation, or is something really going wrong? The Mach E is only 1.5% of Ford’s units sold in 2021, so I wanted to learn more about other models.

First, some sales data from December 2021.

Broncos are a much higher volume (~7% of units sold). A quick bounce over to the much more popular Bronco forums is confirming a similar situation. With some Bronco production in Michigan (vs Mexico), folks have been driving around / flying drones taking videos of holding lots with many many many vehicles on chip hold. Also these forums seem to be very popular, with over 6k+ posts on threads for a given production week. Mostly people trying to figure out where their car is. And as others have noted, it’s still a 6 month wait when things are going smoothly.

Have had a harder time assessing the Maverick situation - but someone seemed to get information from a dealer that 6k/month are scheduled to build through May. At that rate, it would be 3.8% of Ford’s volume and not even close to fulfilling the 100k orders.

I did not have much luck finding forums on the higher volume models. F series forums are more scattered, but folks appear to be getting their orders at a reasonable lead time with fewer reports of hiccups.

There was a report of the Flat Rock plant shutting down for one week due to a chip shortage on Jan 18th. That plant only produces Mustangs, though.

Overall production is down year of year, but this news came out in early Jan and coincided with the runup to ATH. This is my first time really tracking an automotive company’s earnings - when they release sales data on a monthly basis, does this mean revenue/sales data for the ER quarter is already known/priced in?
(paywall) Ford Sales Impress. The Company Handled the Chip Shortage Admirably. | Barron's

Now the ticker is back to the 2021 EOY level so I’m trying to compare what sentiment was then to what we think the situation is now. The majority of their production is likely going fine. But the vehicles that have the most hype are struggling and I still don’t think they’ve stopped the bleeding. Assuming this is correct, this news is not widely reported yet. I wonder if it will break before ER or not.

I took a very small gamble position on puts today.

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All good info. I can say this. My F store in particular because that’s all I can fully know for sure. Was down Q4 to Q3 inventory. So if that extrapolates out to others low inventory means low sales. I think earnings will reflect this. To the microprocessor point. Yes significantly more and more are being put on “chip hold “ yet again. Hasn’t reached the Louisville speedway filled with them type of levels but they are definitely having issues. Chip supply decreased 23 percent this week over last. That’s not good!

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So here are the Jan sales.
https://www.businesswire.com/news/home/20220202005586/en/Ford-Begins-2022-with-Record-Electrified-and-SUV-Sales-Momentum-Electrified-Vehicle-Sales-Expand-at-Almost-4-Times-Rate-of-Overall-Industry-Segment-F-Series-Hits-40-Millionth-Sale-January-New-Retail-Vehicle-Orders-Hit-90000-–-A-New-Record

Here are the publication of sales

As we can see 2021 sold less than 2020.

In regards to earnings play it might go fairly flat like GM and trade on the news of EV and will be dependent on fridays momentum. Was initially thinking of playing calls but im not too sure right now. Considering Ford is very visible with their news and is following Teslas media relationship strategy, things might be priced in already from a sales perspective.

Good info. I think earnings will consist of blowing smoke about EV restructuring as mentioned in article. As far as retail order sales being highest ever. That is simply because there is no ground stock inventory. So people need cars and trucks they have to order them. However those numbers also don’t mean squat if they can’t produce them. Currently on Superduty they have been able to fill all retail orders placed prior to November just now. So essentially on their number one profitable line they have a four month back log of sold orders due to production supply chain type of issues.

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Sales figures provided by GCBC in the charts do not seem accurate from the data I have access to. something to consider if you are looking to play F earnings

What is the data that you see? If you cant comment on it can you give us a summary of difs from the GCBC data?