Newest Pair of Recalls Sends Ford Stock (NYSE:F) Into Freefall

Legacy automaker Ford F -4.06% ▼ took it on the chin today, as word of yet another recall landed like a cinderblock dropped off the Empire State Building. Worse, it was actually two recalls; one focused on a huge number of drivers, and a second, much smaller one trailing along like an afterthought. Neither was good news in isolation, and the pair together sent investors packing. Ford shares plunged over 4% in Thursday afternoon’s trading.

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The big recall, which hit 604,533 vehicles, was a fairly minor issue, one that will likely be fixed without much incident. It focuses on a windshield wiper motor for the front windshield wipers, which could either fail outright or work periodically, causing intermittent response or no response at all. That in turn could increase the risk of a crash due to decreased visibility. This recall focuses on Ford Explorers, Ford Escapes, Lincoln Aviators and Lincoln Corsairs made between 2020 and 2022.

The second recall focuses on just 11,431 vehicles, but the problem is much more serious. Reports note that this is over an issue of a friction weld in the driveshaft, which could give way and cause the rear driveshaft to separate. This means a sudden loss of drive power.

Mounting Competition

Ford has long been in competition with crosstown rival General Motors GM -3.47% ▼ , and now, it turns out the duo is in competition elsewhere. Specifically, the world of Formula 1 racing. GM stepped into the market in a partnership with the Cadillac F1 team. The new rivalry will hit the track running as well, with the first race set to kick off this weekend in Australia.

General Motors announced its presence in F1 recently, with a Super Bowl ad, which was subsequently joined by a “Shot on iPhone” campaign. And with Ford sticking to its guns, announcing via slogan that “Every Ground is our Proving Ground,” it is clear that GM and Ford will be taking their newest competition very seriously. They will also likely be using the competition as fertile ground for marketing in both directions.

Is Ford Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Hold consensus rating on F stock based on three Buys, 12 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 33.3% rally in its share price over the past year, the average F price target of $14.02 per share implies 13.8% upside potential.

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