“Chokehold Beijing Holds on Global Supply Chains”: Ford Stock (NYSE:F) Gains Despite Revealing Plant Closure Cause

The latest news about the various trade wars going on nationwide probably should not have had the impact they did for legacy automaker Ford (F). While a recently-minted trade deal with China should improve access to rare earth metals in the United States, Ford revealed that it briefly had to close a factory due to a shortage of same. But In fact, the latest numbers suggest that it has gained on some fronts, but lost in others. Investors did the math on that and discovered they ultimately came out ahead. Thus, Ford shares were up fractionally in Wednesday afternoon’s trading.

While certainly, rare earths are a big part of electric vehicle manufacture, they are also a big part of regular vehicle manufacture. They have a hand in everything from windshield wipers to speakers, which means large portions of a car are simply not getting made without these resources. Though a new trade deal has been established that gets rare earths back and flowing, it remained clear that China’s stranglehold on the market—it supplies the United States with about 90% of its rare earths—is a serious problem.

The Center for Strategic and International Studies offered comment, noting “The centrality of rare earth export restrictions to the trade deal underscores the criticality of minerals to the U.S. economy as well as the severity of the chokehold Beijing holds on global supply chains.”

Does Anyone Really Care About Engines?

Granted, everyone has to care about engines to a certain degree. After all, without them, the car simply does not go. But a lot of the enthusiast interest in V8 and V6 and even V4 is fading, with some even believing that interest in internal combustion engines in general is on the decline.

John Lawler, Ford’s vice-chairman, noted that “A lot of that is gone.” Lawler noted that engines used to define a lot about a car, like its horsepower, its torque available, and even displacement. But people care a lot less about that than they once did. In fact, more people seem less concerned about what engine a car has and more concerned about how much that engine will cost to be repaired, or how far it will go.

Is Ford Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, 12 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 11.98% loss in its share price over the past year, the average F price target of $9.71 per share implies 8.48% downside risk.

See more F analyst ratings

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