Wall Street Ups Bet Against Ford's Stock
Why an increase in bets against a rise in Ford's stock? Among other things, the shares may have gotten expensive. It changed hands for $14.62 on April 18. It close yesterday at $15.15, That is a gain of almost 4% in a short period of time.
A Few Big Obstacles?
Several challenges could disrupt Ford's good fortunes. The first is the most obvious. Gas prices are nearly $4. People may be reluctant to take on the cost of a new car, even if it is a fuel-efficient one. Or, buyers may turn to the used car market to get a deal at a lower price.
Ford also may be challenged by competition. Toyota (TM) recently announced that its earnings in the last quarter fell more than 75% after sales in its home market were devastated by a recent earthquake. Its supply chains have been slowed and may well not pick up until later in the year. Toyota and its Japanese rivals may need to offer lower prices to get customers back into its showrooms.
Another huge challenge for Ford is the Chinese market. It is the world's largest nation by total annual car and light truck sales. GM (GM), VW and their local partners dominate that market now, and European and Japanese manufacturers have rushed to take advantage of a huge and growing opportunity.
Ford has certainly staged a huge turnaround after being the only U.S. car company to avoid Chapter 11. The next year could be its biggest test yet.