Ford pauses gains ahead of fourth quarter 2021 results. What should you expect?

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Ford Motor Company (NYSE:F) has dropped more than 30% in the past two weeks in a correction coming just a few days to the announcement of fourth quarter 2021 earnings. Despite the selloff that was aggravated after the company halted the orders for Maverick hybrid pickup, some analysts remain bullish on the stock. Zacks consensus estimate on Ford’s earnings has increased by 4 cents in the past week to 43 cents per share from $35.02 billion revenue. 

Nonetheless, taking a broader look, Ford has been on an uptrend since September last year thanks to its inroads into the growing electric vehicles space. The transition seems to be giving investors some confidence that the company would largely profit from the segment. CEO Jim Farley notes that about 40% of the carmaker’s sales would be EVs by 2030, and its success could boost profitability in the long term. 

However, the global semiconductor chip shortage remains a concern. Farley pointed out in the third-quarter report that chip shortage was affecting operations and may persist up to 2023. Investors would be keen to see how this matter is being addressed and the possible effect is moving forward.

Ford corrects to the downside but keeps the trendline intact

Source – TradingView

Looking closely at the daily chart, Ford is on a correction but still trading above the ascending trendline. The RSI is at 37, showing that investors remain cautious to see the market’s direction before making their decisions. Meanwhile, Jefferies’ analyst Phillippe Houchois has downgraded his rating from buy to hold despite increasing the price target to $20 per share.

Final thoughts

The progress in the electric vehicle segment would largely play a major role in the direction of Ford stock in report. Investors would also be keen to see whether production would be affected by the global shortage in semiconductor chips. If the results turn out positive, we could see a bullish reversal and a change in market sentiment. However, anything to the contrary could open more weakness and a further dip.

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