Don’t Rush to Buy the Dip in Ford Stock Just Yet

There has been a broader market selloff amid the escalating tensions in the Middle East. The meltdown has created some good buying opportunities, but not every stock that has come off its 2025 highs is a buy. One legacy automaker, Ford (F), still does not look like a compelling buy despite having fallen over 15% from its recent highs.

Why Is Ford Stock Dropping

While some of the fall in Ford shares is due to the weakness in wider markets, company-specific factors are also adding to the doom. Last week, the company recalled 4.3 million vehicles over software issues, which was preceded by a recall of 4.13 million vehicles due to an issue with rear suspension toe links. Now, the National Highway Traffic Safety Administration (NHTSA) has said that the Blue Oval will recall over 600,000 vehicles due to an issue with the windshield wiper motor. While recalls are not uncommon in the automotive industry, in Ford’s case, the frequency has been unusually high.

Last year, the company had 153 recalls, which is the highest for any automaker in modern history. In terms of numbers, it recalled 12.9 million vehicles last year, and 2026 looks like it'll be another dismal year for Ford in terms of recalls. While Ford’s management has long been saying that recalls and higher warranty costs are a “legacy” issue it is trying to address, it has also recalled many of the newer models, so they can't be brushed aside as legacy issues. 

To make things worse, February sales data showed that Ford’s U.S. sales fell 5.5% compared to the corresponding month last year. Its internal combustion engine (ICE) car sales fell 0.1%, but the 71% fall in electric vehicle (EV) sales and 21.8% decline in hybrid sales pulled down the company’s consolidated numbers.

Notably, legacy automakers’ EV businesses are struggling, which has prompted them to book massive losses on their multi-billion-dollar bets. In December, Ford announced a $19.5 billion write-down, of which $5.5 billion would be in cash. Detroit rivals General Motors (GM) and Stellantis (STLA) have also announced massive charges from their respective EV businesses amid stalled sales following the withdrawal of the EV tax credit.

Ford Stock Forecast

Sell-side analysts haven’t been too bullish on Ford for quite some time. Of the 22 analysts currently covering F stock, only four rate it as a “Strong Buy,” while 15 rate it as a “Hold.” The remaining three analysts rate it as a “Strong Sell,” and the stock trades above its mean target price of $13.51. Ford’s Street-low target price is $10, while the Street-high target price is $16, which is around 25% higher than current prices.

Should You Buy the Dip in F Stock?

I believe Ford’s problems are threefold. First, the company’s internal combustion engine (ICE) business has been bogged down by recurring warranty costs. While General Motors was making healthy profits and cash flows from selling gasoline cars, Ford could not reap similar benefits.

Second, while legacy automakers are incurring losses in their EV businesses, Ford’s losses have been much wider than General Motors'. Finally, Ford’s capital allocation strategy has been tilted towards dividends, while, as I have long argued, share buybacks would have made sense for the company.

One of the reasons Ford's stock hasn’t gone anywhere over the last two years, while GM has almost doubled, is because of the latter’s aggressive share buybacks, which helped it increase its per-share earnings. Moreover, the Mary Barry-led company has fared a lot better on execution as compared to Ford, which has been found wanting several times.

I have preferred GM over Ford for quite some time now and maintain my stance. I capitalized on last year’s rally in F stock and trimmed my holdings. While the stock’s valuations have since corrected and it trades at a forward price-to-earnings (P/E) multiple of 8.82x, I don’t see the risk-reward as compelling enough to buy more shares.