What Just Happened?
Ford (F) sank more than 6% today, making it one of the biggest losers in the market. This selloff came despite the automaker posting a fourth-quarter earnings beat, with $48.2 billion in revenue (up 5% YoY) and adjusted EPS of $0.39, exceeding analyst expectations. The real problem? Ford’s 2025 guidance underwhelmed—and investors wasted no time dumping the stock.
The company is now forecasting adjusted EBIT between $7 billion and $8.5 billion for 2025, a major decline from $10.2 billion in 2024. With Wall Street expecting stronger numbers, this conservative outlook sparked concerns that Ford’s profitability is under pressure.
Adding fuel to the fire, Ford’s EV division reported a $5.1 billion loss in 2024, and management expects another $5 billion to $5.5 billion loss in 2025—not exactly the growth story investors wanted to hear.
Traders' Immediate Reaction
The market’s response was swift and brutal. Ford’s stock gapped down at the open and continued lower throughout the session, hitting an intraday low of $9.29 before settling near $9.35.
- Institutional sentiment: Hedge funds and large investors appeared to trim positions, with selling pressure accelerating after CEO Jim Farley’s cautious commentary.
- Options flow: Traders piled into put contracts, particularly at the $9 and $8.50 strikes, indicating rising downside bets.
- Retail reaction: While some retail investors saw this as an overreaction, Ford's weak guidance made it difficult for bulls to step in aggressively.
Adding to the uncertainty, Ford warned that proposed tariffs on Canadian and Mexican auto imports could significantly impact profits—another headache for investors already worried about macro risks.
Where’s the Opportunity?
Despite today’s drop, there’s a potential setup for both bearish and opportunistic traders:
🔴 For bears:
- Ford’s weak guidance and EV struggles suggest more downside ahead, especially if the company revises estimates lower.
- If Ford breaks below $9.20, it could retest 52-week lows near $8.50 in the coming weeks.
🟢 For bargain hunters:
- Ford’s price-to-earnings ratio is historically low, and its truck/SUV market remains strong, offering a longer-term value case.
- Watch for a rebound if the stock stabilizes near $9 and institutional buyers step in.
Tactical Moves: How to Trade This Setup
Day traders: Look for a potential bounce play near $9, but keep stops tight.
Swing traders: If bearish momentum continues, put spreads (e.g., $9/$8.50) could capitalize on further weakness. Alternatively, if Ford stabilizes, selling cash-secured puts at $9 or lower might offer an attractive entry.
Long-term investors: Ford’s dividend remains intact, and if shares overcorrect, this could be an accumulation opportunity for patient investors.
The Trader’s Take (Isabella’s Perspective)
This is a classic example of a market overreacting to a cautious forecast. Ford’s core business remains strong, but its EV division is bleeding cash, and management is taking a realistic, rather than overly bullish, approach to 2025.
As a macro trader, I see two key takeaways:
1️⃣ The EV market is still facing demand issues, and legacy automakers like Ford are struggling to gain traction. This isn’t just a Ford problem—Tesla and GM are also feeling the heat.
2️⃣ Macro risks (tariffs, rate uncertainty, and supply chain pressures) are real, and companies that rely on global manufacturing (like Ford) are the first to feel the squeeze.
From a trading perspective, I wouldn’t rush to catch this falling knife just yet. If Ford finds support around $9, it could set up for a long-term value play—but if we break lower, bears could stay in control for a while. Watch the $9 level closely and pay attention to institutional positioning in the coming sessions.
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