Ford Motor Co.'s stock price has vexed Executive Chairman Bill Ford for years.
At the company's 2015 shareholders meeting, the first since Mark Fields succeeded Alan Mulally as CEO the previous summer, Ford admitted he watched the shares fluctuate daily — and sometimes hourly — but believed the issue ultimately would "take care of itself." The stock fell 1 percent that day, to $15.27.
Two years later, Ford Motor shares were worth less than $11, and Fields was out. Bill Ford touted his new CEO, Jim Hackett, as a "visionary" who would speed decision-making, in part to convince Wall Street that the automaker has a clear plan.
But on Hackett's watch, Ford stock, down 37 percent under Fields, has slid 20 percent more. It dipped as low as $7.41 in December.
That Ford seemingly can't win over Wall Street punctuates the challenges legacy automakers face in inspiring confidence among an investment community that's only growing more skeptical as a market downturn looms. Major disruption from electric vehicles and autonomous vehicles is pushing auto stocks further out of favor.
"The domestic automakers have always been underloved and underowned," David Kudla, CEO of Mainstay Capital Management in Grand Blanc, Mich., told Automotive News. "The way to perform the way Wall Street wants you to is to get results. It's not about headline-grabbing news or things that give the stock a short-term bump. It's about five-year plans and a winning strategy that instills confidence in your employees and shareholders."
Over the past five years, General Motors and Ford have underperformed the broader stock market, even after accounting for the relatively generous dividends they pay shareholders.
But it's not just those automakers. Even Tesla — which the market values at some $20 billion more than Ford — has yielded returns less than 10 percentage points greater than the Dow Jones Industrial Average since January 2014. The best-performing U.S. automaker over that period has been Fiat Chrysler Automobiles, whose shares had more than tripled before giving back some of those gains over the past 13 months.
For all of the bold actions that GM has undertaken — exiting unprofitable markets, cutting salaried workers, buying back shares and investing in self-driving and electrified vehicles — its stock has remained stagnant.
Investors ask, " 'Why should I buy GM now if we are going to have a recession in the next 12 to 24 months?' " Morningstar analyst David Whiston said. " 'Instead of buying GM in the high $30s, maybe I can buy GM in the mid-$20s.' "