Surely weakness in European vehicle sales didn't catch that many by surprise. Instead it seemed Europe's economy circling the drain became the catalyst for a knee jerk reaction for many to liquidate shares in Ford with total disregard of value.
Apparently some investors didn't notice that the perspective shift in places like Greece, Spain and soon France, based on their last election. Of course, the selloff could be as much a market signal to Ford to "get it together" in Europe. An unlikely message, considering Ford CEO Alan Mulally ranks as one of my top 10 CEOs in the world. Ford under Mulally's leadership destroyed GM (GM) and Chrysler, while positioning Ford as the last man standing during the auto crisis.
Ford is bigger than GM. GM has long been considered the bigger of the two companies. From a company valuation point of view, Ford is the bigger company with a market cap of $36.6 billion vs. GM's valuation of $30.8 billion. Granted, GM sells more vehicles and has greater revenue; however, Ford makes more money. In my book, the company that makes the most money is the biggest company. Even without using earnings as the benchmark, market cap is still more important than the number of sales.
Compare with FacebookEntirely too much investor attention was paid to the recent IPOs of Zynga (ZNGA) and subsequently Facebook (FB). Zynga has a crucial relationship (closer to dependence) with Facebook and has publicly traded much longer, making them an important bellwether for the social networking giant. I have written about Zynga before (see my articles Oops, I Did It Again: Facebook and Zynga Hit New Lows and How to Catch a Falling Knife) and the best thing I can say about the stock is if they deliver a strong beat, the amount of short interest may create a short-seller squeeze. Short interest peaked on the May 15 reporting date at 56.6 million shares. Short interest has backed off since the peak at 38.7 million shares, but well above the average during 2012. Short interest is a key metric that investors should follow because short sellers are generally the shrewdest guys in the room.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV