Ferrari: a difficult stall to understand?

The Italian brand took a dive yesterday after presenting its H results, and its stock continued falling today. There is little to justify such a sharp drop, which brings the share 1price back to where it was a year ago.

For many years, Ferrari shareholders have enjoyed the rise of this Italian success story. Setbacks, such as yesterday's, remain rare, as the brand excels at not disappointing.

It is true that the Prancing Horse reported quarterly revenue slightly below consensus expectations, although it was only 1% short. Also, over the year, revenue is still up 4%.

Another possible criticism is that growth is less robust than it was a few years ago. The number of vehicles sold has been increasing at a more moderate pace since 2023. Here again, optimists will point out that Ferrari is perfectly managing its price increases to offset lower volumes and has an order book that offers excellent visibility for at least the next two years.

Forecasts are also at the heart of the debate. The stockmarket reaction suggests that some shareholders were disappointed by the fact that there was no  increase in annual targets. But here again, this is hardly surprising: Ferrari has always been almost religiously cautious in its communications. This above all reflects the group's ability to finely tune its sales, production, and customer relations. If necessary, it can simply speed up deliveries of limited-edition models, which sell for much more than traditional models, to stimulate growth. It sounds simple, but that's the idea.

Meanwhile, fears relating to the current environment seem unfounded. If some customers are adopting a wait-and-see approach, it is more due to the lack of available models than to the macroeconomic environment or customs duties. Ferrari operates in a kind of parallel universe where purchasing power is not really an issue. As with Hermès, customers are relatively unaffected by the economic climate, which explains the smooth acceptance of price increases. Concerning customs duties, the brand has already raised its prices to offset the impact and will soon reduce them (as announced yesterday) when those applied by the United States to products manufactured in the European Union fall from 27.5% to 15%. Consequently, while demand appears to be temporarily down, this is primarily due to a lack of supply. In this respect, next year's arrival of the spectacular F80 and Amalfi, which are set to succeed the sublime Daytona SP3, could help to revive enthusiasm and sales.

All said, Ferrari has little to blame itself for. The fundamentals are still there, visibility is excellent, the balance sheet is solid, and the stockmarket reaction seems exaggerated but undoubtedly amplified by the high volatility of the markets, as illustrated by Hermès (-5% the day before yesterday). The stock lost 11.7% yesterday and is down another 3.5% today.

Spectacular growth trajectory (source: MarketScreener)