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Amongst a broad-based decline within the markets today, investors are clearly pricing in greater uncertainty. Whether it’s electric vehicle (EV) makers like Ford (NYSE:F) or a number of other growth stocks, investor concern over the upcoming Federal Open Market Committee (FOMC) meeting is pushing significant selling pressure available in the market. Today, Ford stock is down about 2% on news that the corporate will slash prices for the Mustang Mach-E.
This move follows similar cuts for Tesla’s (NASDAQ:TSLA) line of EVs earlier this month. Because the competitive landscape shifts, Ford has noted the necessity to keep pace with automobile buyers’ expectations that prices will come down. Indeed, as one in all the biggest EV makers in the US, Ford appears to be willing to play the cost-cutting game to keep up and grow its market share over time. Nevertheless, it’s unclear how these moves will affect margins moving forward.
Let’s dive into what investors may intend to make of today’s Ford stock news.
Ford Stock Tumbles on Price Cuts
The value cuts proposed by Ford appear to reflect roughly 9% discounts for automobile buyers. Indeed, for those interested by buying a Mach-E, that is the form of announcement which will make the vehicle more attractive. Moreover, for automobile buyers trying to make add-ons, this cut will be sure that a greater proportion of buyers could also be eligible for presidency incentives. Currently, the Inflation Reduction Act specifies rebates of as much as $7,500 for vehicles priced under a certain threshold.
Thus, this news should end in a volume increase for Ford. Nevertheless, for a corporation with less gross margin to work with relative to Tesla, analysts remain uncertain about how positive these cuts will likely be.
Worries a couple of “price competition” in EVs are also concerning investors immediately. Although great for automobile buyers, that is the form of environment that would make the sector tougher to speculate in.
For now, I believe the EV sector is clearly under pressure. Higher rates of interest have hurt demand, resulting in less interest in EV stocks across the board. Accordingly, the decline in Ford stock appears to be warranted given today’s news.
On the date of publication, Chris MacDonald didn’t hold (either directly or not directly) any positions within the securities mentioned in this text. The opinions expressed in this text are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and tackle various management roles in corporate finance and enterprise capital over the past 15 years. His experience as a financial analyst up to now, coupled together with his fervor for locating undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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