Global automaker Ford Motor Company (NYSE:F) reported third-quarter Fiscal 2022 results that beat analyst expectations on both the revenue and adjusted earnings fronts. However, the company’s bottom line took a $2.7 billion hit from the write-off of its investment in Argo AI, a fully autonomous self-driving start-up.
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Ford recorded a non-cash, pre-tax impairment charge on Argo AI which resulted in an $827 million net loss in the quarter. Argo AI is shutting down operations since both its financers are withdrawing their support. Ford invested $1 billion in Argo in 2017 and Volkswagen (DE:VOW) committed $1.7 billion to the start-up in 2019.
Through Argo AI, Ford had hoped to capture the fully driverless robotaxi market, but delays in meeting deadlines and possible weakness in demand may have turned the automaker wary.
Ford has decided to shift gears from the L4 advanced driver assistance system (ADAS). Instead, the automaker will focus on lower levels of internally developed technology. “It’s mission-critical for Ford to develop great and differentiated L2+ and L3 applications that at the same time make transportation even safer,” Ford CEO Jim Farley stated.
Meanwhile, both Ford and Volkswagen will employ a majority of Argo AI’s 2,000 employees in their respective autonomous driving ventures.
Is Ford Stock a Buy or a Hold?
Ford stock has a Moderate Buy consensus rating on TipRanks. This is based on seven Buys, five Hold, and two Sell ratings during the past three months. The average Ford Motor Company price forecast of $16.50 implies 28.7% upside potential to current levels. Meanwhile, F stock has lost 39.8% so far this year.
Currently, Ford trades at a Price/Earnings (Non-GAAP) multiple of 7.91x. This is lower compared to the sector median of 9.97x, reflecting a 20.6% discount. As a result, the stock is cheap and has the potential to rise.
