Ford Call Buyers into Weakness Catches Epic Q4 Ride on EV Shift
Ford (F) has been one of the stronger Q4 stories in the market with shares moving up more than 50% and back on 7/19 we highlighted massive longer-dated options activity positioning for an upside move. The action happened right into a strong sell-off and although it took a few weeks to start working higher the positions are now up massively.
I would reiterate we love to see multiple days of activity across multiple expirations and strikes with a greater emphasis on longer-dated positioning which was the case here.
This was the 7/19 Write-Up:
“Ford Motor Co (F) seeing a lot of bullish flows this morning into the gap lower including early action with nearly 10,000 January 2023 $20 deep ITM puts selling to open $7.10 bid, buyers of 2000 March $14 calls and another 30,000 January 2023 $10 calls bought today for $4.30 to $4.35, looking to add to OI. Ford has seen buyers recently in the September $13 calls, over 25,000X, and 9,000 August $13 calls while the June $12 puts sold to open in size. Shares are putting in a hammer reversal today off of the May breakout range at $12.75 as well as the top of March/April value. A snapback move targets the July VPOC at $14.40. Longer-term, Ford is back at trend support of the broader bull trend from January and has channel resistance up around $18. The $55B company trades 7.45X earnings, 0.43X sales, and 2.3X FCF. Ford is on the cusp of a major philosophical shift after announcing ambitious plans in May to move forward with a more tech-focused strategy that includes shifting most of their commercial and trucking lineups to EVs over the next decade. They unveiled their new F-150 EV, the top-selling truck in the US, and plans to boost spending on EV development to $30B through 2025 as they look to expand capacity and scale. Ford is also looking to broadly boost revenue from digital services leveraging their close ties to contractors, utilities, and government fleets. Analysts have an average target for shares of $14 with a Street High $18. BAML positive last week expecting a solid quarter and outlook while noting that the current semiconductor shortage is dragging on sales but creating additional pent-up demand to be more rationally released over a multi-year recovery. UBS positive in June citing Ford’s intention to boost its EV/AV spending to over $30B over the next five years and highlighting its all-electric F-150 Lightning comes with an attractive base price just below $40K. Barclays checks were positive recently into the earnings print as mid-month data indicated stronger than expected pricing for the company. Short interest is 1.65%. Hedge fund ownership rose 5.5% in Q1, Artal Group a top buyer of call options while Alkeon remains a top holder as well. In February, a director added $100K in stock at $11.62. Ford has earnings on 7-28.”