In a new piece for the Detroit News, Michael Martinez discusses the frustrating stock market performances of Ford Motor Company F and General Motors Company GM in the face of record profits and stellar execution.
Martinez explains that the market seems to be punishing GM and Ford for a lack of transformative technological changes in the period since the industry restructuring.
On the other hand, tech-driven electric car rival Tesla Motors Inc TSLA has been repeatedly given a pass despite the fact that the company has yet to turn a profit.
GM and Ford both generated record profits in 2015. GM recently announced $9.5 billion in net income for 2015, while Ford announced plans to reward its shareholders with a $1 billion special dividend. Both stocks are down more than 20 percent in the past year.
“If a company posts a beat or issues impressive guidance, it’s viewed as unsustainable or unrealistic,” Barclays analyst Brian Johnson recently wrote of the market’s perception of Ford and GM. “If a company posts an inline result or even has a whiff of an issue, it’s big trouble for the stocks, as it’s surely a sign of more pain to come.”
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Martinez notes that the market’s belief in and excitement about the Tesla story is so strong that tweets from CEO Elon Musk have been known to immediately boost Tesla’s share price by several percent.
Tesla’s stock is up 532 percent in the past five years, while Ford and GM’s stocks are both down more than 23 percent in the same period.
Disclosure: the author holds no position in the stocks mentioned.
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