Chart Of The Day: The Expectations Game Edition

Edward Niedermeyer
by Edward Niedermeyer

Ever since it beat back expectations of bankruptcy, Ford’s stock has been on fire, pushing the Blue Oval to the highest market capitalization of the Detroit automakers. Then, on Friday, when Ford announced its best financial results in over a decade, investors mysteriously sent the stock tumbling, pushing GM’s market cap higher than Ford’s for the first time since its government-ordered restructuring. How did that happen? Even with the one-time expenses Ford blamed for its Q4 drop in earnings, analysts expected Ford was expected to earn $2.05 per share… and analysts punished the automaker for making only $1.91 per share before special items and $1.66 after same. Since markets re-opened today, Ford’s market cap has gone on to $55.39b while GM has dropped back down to $54.73b, suggesting that GM’s stock price has been corrected downwards relative to Ford’s disappointing financial performance. Still, despite greater European-market problems, GM’s strong Chinese-market position will keep The General hanging just behind Ford waiting for the upstart automaker to stumble again.

Edward Niedermeyer
Edward Niedermeyer

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  • GS650G GS650G on Jan 31, 2011

    I'm in for the long term, I think F will hit 25 next year as their positioned well for tight gas prices. It is disheartening to see the price get savaged in 3 days of trading. I'm still in the black on it so I'm staying put. I think a lot of people saw 18 as the bailout point anyway.

    • Picard234 Picard234 on Jan 31, 2011

      I agree. I'd bet a lot of people who bought F at $1 - $3 on their e-trade accounts set the automatic sell at $20. Once the stock tickled $20, they got cashed out. I'm holding on, if for no other reason than I don't need the cash or the tax hit right now -- and I'm betting it goes even higher. $25 - $30 a year from now sounds very good - and very likely - to me.

  • PeriSoft PeriSoft on Feb 01, 2011

    From now on, I expect all my stocks to beat analysts' expectations by more than I expect them to. Seriously, this is the kind of logic people use. I'm not even joking. I recall Google beating expectations, but there being a sell-off, because Google was -expected- to beat expectations by -more-. Those who argue that laissez-faire capitalism is the definition of efficiency might want to update their models to reflect the fact that investors are not - as is almost always assumed - rational. They might discover some things they don't expect.

  • Windswords Windswords on Feb 01, 2011

    It's got to be a conspiracy. No way that GM is worth more than Ford. Obama's minions are up to no good, I tell ya. You know, just like they did with the Toyota UA. It's a conspriacy, yea, that's the ticket!

    • PeriSoft PeriSoft on Feb 01, 2011

      The sad this is that I couldn't tell whether or not you were joking until I got to "I tell ya"...

  • Zackman Zackman on Feb 01, 2011

    I don't quite know what to make of this, as I wish evil on no one, certainly not Ford. This is typical as stated above. The stock market for too many has become one big get-rich-quick scheme. It used to be you invested in a company over the long haul because you believed that they would actually strive to consistently better themselves and grow. Also, so you could either gain additional retirement income from dividends or pass on the stock to your children as a ready investment. Now? Greed is truly good, the system is racing to the bottom, so get all you can while you can. It would be nice if I were wrong, but something tells me I'm not. I'm sure Ford stock will recover somewhat.