By
Bhushan Akolkar
October 27th, 2023
Ferrari recently released its earnings report. RACE stock rose yesterday as a result of the news. This makes Ferrari one of the most valuable car companies in the world by capitalization.
Ferarri N.V. (NYSE: RACE) just released its quarterly earnings report. The report seems to have outperformed other Automakers like Ford and General Motors. Sources say that Ferrari (RACE) stock went over 6% yesterday to $158.53. At the press time, in the pre-market, Ferarri stock is $153.50 (-3.17%).
The Q1 performance of the racecar maker beat earnings expectations. Revenues for the quarter fell to $1.02 billion. This is better than the $852 million that was expected. It is also a marginal 1% reduction in prices.
Operations in Ferrari’s Maranello and Modena factories are resuming. This comes after being shut down in March due to the COVID-19 pandemic in Italy.
Investors Like Ferrari (RACE) Stock at the Moment
Investors in the Automotive industry are making big bets on supercar makers like Ferrari. This is because of the exclusive nature of their products. Added to that are high-profit margins and a well-known brand name. Ferrari seems to be in a position to withstand the business problems that the COVID-19 pandemic is causing.
This comes even though Ferrari makes only about 100,000 cars a year. Compared with about 7.7 million cars from General Motors Company (NYSE: GM). Many had expected that the automaker will be taken to the cleaners due to a drop in demand. The reverse is occurring.
Ferrari’s market capitalization hit $30.1 billion on Monday morning. It dropped slightly to $29.8 billion before the close of business. General Motors market capitalization is a little under $29.3 billion while Ford Motor Company (NYSE: F) capitalization is about $19.2 billion.
The Fiat Chrysler Automobiles N.V. (NYSE: FCAU) has seen its market capitalization drop to under $13 billion. This is ominous in itself for the company that spun out Ferrari.
The $0.99 earnings per share indicate growth in Ferrari’s revenue stream. This comes despite the slight decline in actual revenues. Ferrari has already indicated that the Formula One business unit will have issues in this quarter. This is due to the coronavirus situation that has limited public events across the globe.
Luxury Cars Won’t Lose Much Business
Ferrari may still have business among those who can afford its cars though. Its brand allows for sales of cars above the $250,000 mark. Cars can go as high as $1 million.
Margins, on the other hand, are another story. They can go as high as 24%. The average automaker can barely make a profit with margins of about 5% or even less. Despite the decline in business across several jurisdictions, Ferrari will do just fine.
Luxurious cars aren’t known to fare too badly during times of economic crisis. This is because of their limited exposure to the market place. If there are companies that only sell stuff to rich people, then such companies won’t have too many issues.
