Insights

Why Ford Stock Jumped Monday

What happened

Ford Motor Company (NYSE: F) shares jumped nearly 5% to start out the week after the company reported second-quarter earnings less than one week ago. Today’s bounce didn’t come from the earnings directly, but did follow an announcement on a topic that was touched upon last week. As of 2:45 p.m. ET, Ford stock had pared some of that gain, but remained 4.4% above Friday’s closing price. 

So what 

Ford said today that it would be offering a new version of its highly popular Maverick pickup truck. The announcement follows discussion last week on how the company will improve profitability as it seeks to invest heavily in its electric vehicle lineup. The new package being offered with the Maverick is one way the company plans to do that. 

Now what

The Maverick is Ford’s entry-level pickup truck with a starting price of around just $21,000. Today the company announced it will be offering an off-road package for the hybrid vehicle. The Tremor package will cost about $3,000 and can be ordered beginning this fall, reports CNBC. 

Ford has previously said the Maverick is attracting young buyers, many of whom are new to the Ford brand. The new package is an example of how Ford plans to leverage its existing platforms to enhance profitability. Last week, CEO Jim Farley said the company plans to invest $50 billion to grow its electric vehicle production to an annual run rate of 600,000 by the end of 2023 and 2 million just three years later. 

It aims to pay for much of that with improved profitability from its existing lineup. Ford will break out the financial performance of its internal combustion and electric offerings beginning next year as it aims to achieve 8% to 10% operating profit in its EV business. One key way to do that is to minimize significant model changes and instead make incremental value-added enhancements to existing platforms. Today’s announcement is an example of how it is doing that. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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