Ford Stock Price Falls: Is It The Apple Of Cars?

January 30, 2013

If you're the sort of person who enjoys similes, you could spend a lot of time comparing today's car companies to Apple.

Like Apple, for example, General Motors came back from the brink of ruin to become a leader in the industry once more. Toyota followed the same path in the wake of 2010's high-profile recall fiasco and 2011's earthquake and tsunami that devastated Japan. 

You could also draw parallels between Apple and Tesla, thanks to the latter's innovative, beautiful, high-tech products. Heck, Tesla even pilfered Apple's ranks to sell its vehicles: George Blankenship, who designed Tesla's controversial showrooms, was also the driving force behind  Apple's monstrously successful chain of shops. And surely there are some linkages to be made between Tesla's polymath proprietor, Elon Musk, and Apple's famous co-founder Steve Jobs (though as we've discussed, Jobs himself would've been a lousy fit for the auto industry).

But at the moment, we're most intrigued by the similarities between Apple and Ford. Despite stellar sales and strong profits, the stock prices of both companies are tumbling.

Exhibit A: Apple [NASDAQ:AAPL]

Because Apple is bigger than Ford, its fall has been far harder and more visible. After peaking above $702 in September, the company's stock price has plummeted, finishing yesterday around $458.

In the grand scheme of things, that's still pretty good -- until 2004, Apple stock had never crossed the $10 mark. But for the past several years, analysts and investors alike have been charmed by Apple's super-hot product lineup and its accordingly super-hot balance sheets. Then in September, the luster wore off a bit. Apple released the somewhat underwhelming iPhone 5 and an operating system with several well-publicized problems (namely, Apple Maps). The iPad Mini that debuted at the same time began cannibalizing sales of its more profitable big brother, and for the first time ever, someone was giving Apple a run for its money in the smartphone market: Samsung.

All of which is to say that Apple is still a-okay, but no company or product stays at the top of the charts forever. (Remember IBM? Atari? Enron? Polariod? Blockbuster?) Apple was bound to slip sometime. Even though it's still flying high -- and some would say that it's due for another surge -- investors are disappointed to see that it's not the invincible company they once thought it to be.

Exhibit B: Ford [NYSE:F]

Ford's stumble is harder to explain.

True, Ford has hit a few rough spots over the past few years. It's still struggling to get back on top of the initial quality rankings due to problems with its Sync and MyFord Touch infotainment systems. The 2013 Fusion has already seen two recalls, and the 2013 Escape has been subjected to four. Ford is also facing considerable public scrutiny (and at least one lawsuit) over its fuel economy claims for the Fusion Hybrid and C-Max Hybrid. 

But of the Detroit automakers, Ford is the golden child, the one that managed to avoid the bankruptcy fate that befell its rivals at Chrysler and General Motors. In the wake of the Great Recession, it narrowed its focus with the widely lauded "One Ford" plan. And it's turned out some great-looking cars, including the 2012 Ford Focus and the aforementioned 2013 Escape and 2013 Fusion. Of all the automakers doing business in America, Ford continues to generate the most positive buzz.

So, why isn't its stock doing better?

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