General Motors stock leaped to record highs after Microsoft invested in GM’s autonomous-driving company, Cruise. It seems that the value of Cruise was like a secret treasure for GM bulls this week.
Make no mistake, Ford Motor stock [$F] is still far from its highs. And its stock has trailed behind General Motors in recent months, but Ford has a treasure, too—the electric-truck maker Rivian. Rivian, as well as other events coming soon, can help drive Ford stock higher, closing its recent performance gap with GM.
Rivian has yet to post any sales, but the outlook for EVs is rousing investors as of late, and Rivian’s first vehicle is due to roll out in 2021. Rivian took in another $2.7 billion from outside investors on Tuesday, increasing its value to almost $28 million, which is vastly approaching Ford’s total market cap of about $40 billion. Only six months ago Ford toted a market cap of just $26 billion.
GM stock soared 10% Tuesday after its Cruise announcement. Microsoft’s [$MSFT] investment swelled the total value of Cruise by about $11 billion, and GM owns a hearty 70% of the entire Cruise venture. Ford doesn’t own as much of Rivian as GM owns Cruise, as Ford gobbled up a minority stake in Rivian in spring 2019. Bitcoin ETF Incoming
For the most part, juicy details surrounding Rivian are few and far between. The new financing was said to be done at a valuation of $28 billion, up from a value of $8 billion back in April of 2020. If Ford owns 10% to 15% of Rivian—a fair assumption according to those familiar with the situation—then the $20 billion value surge in Rivian works out to approximately $3 billion in stock-market value for Ford investors.
Ford stock is up about 4% since news of the Rivian financing hit the headlines. It’s very possible investors are undervaluing Ford’s stake in Rivian. Deutsche Bank [$DB] analyst Emmanuel Rosner foresees more gains for Ford stock in the near future, and he went ahead and slapped a Catalyst Buy rating on the stock. Deutsche Bank uses the Catalyst Buy designation when their analysts think stocks will rise very soon. AMC Gets Another Care-package
Rosner predicts three spark plugs for Ford stock, including “a solid 2021 outlook on its 4Q earnings call…the launch of a number of key models under its new executive leadership team and Capital Markets Day in the Spring where Ford could reboot its redesign program and present a new EV strategy.”
Ford just started shipping its all-electric Mach-E Mustang, adding that it plans to dole out $11 to $12 billion on EV development, producing 40 electrified models. But that milestone was publicized back in 2018 and covered the coming four years. Rosner, despite the near-term bullish outlook, still rates Ford share Hold and has a $9 price target.