$1,000, 5 Years Later: Ford's Bumpy Ride

Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 SPY total return in the past five years is 114.1%. But there is no question some big-name stocks performed better than others along the way.

Ford’s Bumpy Road: One company that has been a lackluster investment in the past five years is automaker Ford Motor Company F. Ford investors who bought back in 2016 and held on through some extremely challenging times have gotten only a minimal payoff for their troubles.

See also: How to Buy Ford Stock

While the valuations of high-growth electric vehicle stocks like Tesla Inc TSLA and Nio Inc - ADR NIO have exploded to the upside in recent years, legacy automakers like Ford have been left for dead.

While many of its auto competitors were investing in next-generation technology, Ford lagged behind in the early part of the 2010s, seemingly prioritizing profits over innovation and growth. As a result, Ford has been trying to play catch-up in recent years, announcing an $11 billion investment in EVs in 2018 and a $1 billion investment in autonomous driving technology startup Argo AI in 2017.

At the beginning of 2016, Ford shares were trading at around $14.15. While the overall market churned higher and higher over the past five years, Ford shares drifted lower and lower. The stock dropped below $10 in mid-2018. In 2019, Ford reported 58% revenue growth, but a net loss of $11.4 billion.

Related Link: $1,000, 5 Years Later: How Much Would Tesla Stock Be Worth?

At the time the stock market was making its pre-COVID-19 pandemic highs in early 2020, Ford shares were trading around $9. When the market tanked in March 2020, Ford hit its low point of the past five years, dropping all the way down to $3.96.

The stock rebounded in the second half of 2020, but a major catalyst helped push it to the upside. First, Ford announced new CEO Jim Farley in August 2020. Farley plans to shift Ford’s focus to next-generation auto technology, such as the company’s recently launched Mustang Mach-E EV and fully electric F-150 pickup, which is scheduled for release in 2022.

Ford In 2021, Beyond: Thanks to the change in direction, Ford shares have come alive once again in early 2021, hitting new multi-year highs of $12.15 before pulling back to around $10.77

Thanks to the recent rally, Ford investors who bought five years ago and held on now at least have a profit to show for it. In fact, $1,000 worth of Ford stock bought in 2016 would be worth about $1,140 today, assuming reinvested dividends.

Looking ahead, analysts are expecting Ford shares to hit the brakes in the next 12 months. The average price target among the 16 analysts covering the stock is $9.50, suggesting 12.2% downside from current levels.

(Photo: Ford)