George Soros Bets Against Ford
Story by Luc Olinga • 13h ago
He has changed his mind.
A few months ago, billionaire George Soros bet on Ford, convinced that the strategy of the legacy carmaker, to close the gap with Tesla in the race to develop electric vehicles, was the right one.
Last year, the financier continued to buy Ford's debt. In the second quarter of 2022, Soros held $29.5 million in debt from Ford. He continued to massively acquire the group's debt during the three months that followed.
According to regulatory filings, the Democratic Party mega-donor held bonds with a face value of $78 million as of September 30, 2022. The paper was convertible into shares. Three months later, Soros had bought more debt from Ford (F) - Get Free Report. He held bonds with a face value of $78.7 million.
This investment showed that Soros was seduced by CEO Jim Farley's strategy, which has made Tesla its main competitor. The company plans to spend $50 billion on electric vehicles between 2022 and 2026. It previously planned to spend $30 billion in the five years ending in 2025. To gain market share fairly quickly, the Blue Oval offers two models in the most lucrative segment of the market: SUVs and pickup trucks; the Ford Mustang Mach-E SUV and the The F-150 Lightning, the electric version of the iconic F-150.
Soros Buys Put Options
Last year, the Blue Oval doubled the number of battery powered vehicles, or BEVs, delivered to consumers. The company delivered a total of 61,575 units, which is a new record. In detail, Ford delivered 39,458 Ford Mustang Mach-E, up 45%, 15,617 F-150 Lightning and 6,500 Ford E-Transit vans.
Production of the F-150 Lightning and the E-Transit van started in 2022. Ford is planning their production ramp up this year. It still said that the F-150 Lightning was already the top fully electric pickup in the U.S.
"The F-150 Lightning was the No. 1 electric truck in America in December and the best-selling electric truck in the U.S. since its launch in May with 15,617 electric trucks sold," the company said in a statement last January.
The pickup truck had already received more than 150,000 reservations.
But despite Ford's promises to increase production, Soros has changed his investment strategy on the automaker. As of Mar. 31, he sold all of the Ford debt he held. And the most striking thing is that he acquired 1 million put options, i.e., the right to sell Ford shares at a locked-in price sometime in the future, according to a recent filing with the U.S. Securities and Exchange Commission (SEC).
If the share price of Ford goes down, Soros will make a profit. Basically, the billionaire believes that there is a downside to Ford.
Ford did not immediately respond to a request for comment.
Soros' bet against Ford comes at a time when the automaker is ramping up production of electric vehicles. This transition significantly affected the first quarter performance of Ford Model e, the division housing the BEV and growth operations.
More:
https://www.msn.com/en-us/money/companies/george-soros-bets-against-ford/ar-AA1baq9s