Located less than twenty kilometers from Modena, Italy, lies Maranello, a town of just under 18,000 inhabitants, renowned as the home of both Ferrari and Scuderia Ferrari, the Formula 1 team associated with the luxury car manufacturer. This past weekend, the celebrations were in full swing at the latter, as driver Carlos Sainz secured a resounding victory at the Singapore Grand Prix, breaking Max Verstappen’s winning streak.
Monday also marked a significant milestone for the automaker itself. Ferrari’s stock is now part of the Euro Stoxx 50, a grouping of the fifty largest publicly listed companies in Europe. This distinction is shared with the French glass manufacturer, Cie de Saint-Gobain.
These two companies have taken the places of German real estate investor Vonovia and building materials company CRH, as announced earlier by Stoxx. The index compiler annually assesses the companies in the eurozone with the highest market capitalization to form its indices. Given the growing popularity of passive investments like ETFs, inclusion in the index is more than just a feather in the cap for these companies.
For Ferrari, this entry into the index follows months, if not years, of outstanding performance on the stock market. The automaker’s stock, traded under the ticker symbol RACE, has already seen an impressive 40% increase in value this year. Since Ferrari’s debut on the New York Stock Exchange in 2015, followed by its listing in Milan in 2016, the company’s value has more than sextupled.
At the American stock market debut, 10% of the sports car manufacturer’s shares were offered for sale. These were previously held by Fiat Chrysler, which was the majority owner with a 90% stake in the company. A few months later, Ferrari was also listed on its home turf. The automaker sold off the remaining stake, finalizing the separation of the two companies. Just over 10% of Ferrari is now owned by Piero Ferrari, the son of the founder Enzo Ferrari who passed away in 1988.
The introductory price on the Milan Stock Exchange was €43. The stock saw a 3.5% drop after opening but quickly recovered to end its first trading day with a slight gain. Now, more than eight years later, a Ferrari share is valued at around €282, bringing the market capitalization close to €55 billion.
The exponential growth of the stock can be attributed in part to the sustained demand for Italian vehicles, which remains remarkably high despite global inflation and rising interest rates. In the second quarter of this year, the company delivered 3392 vehicles and reported a “very solid order book” in its results announcement. This aligns with earlier reports that most models are already sold out until 2025.
The strong demand for these high-end sports cars is reflected in Ferrari’s financial results. In the first half of 2023, Ferrari recorded revenues of €2.9 billion, a 17% increase from the previous year, with a net profit of €631 million. The automaker also raised its profit outlook for 2023, attributed by CEO Benedetto Vigna primarily to “stunning results in personalization.” After all, if you’re wealthy enough to own a Ferrari, a standard model simply won’t suffice.
However, investors seemed largely unmoved by the raised expectations. It was in line with analysts’ predictions and, for some, even considered “a source of disappointment,” noted Bernstein analyst Daniel Röska in a report. This disappointment was reflected in Ferrari’s stock price, which saw a slight decline in the days following the August announcement. Currently, analysts remain divided on the stock. Only 50% of those covering Ferrari are giving a buy recommendation.
Despite the robust sales figures, Ferrari is not resting on its laurels. In a world where the use of fossil fuels is increasingly seen as problematic, the company is embracing electrification. While analysts believe the company lags in the development of fully electric models, Ferrari has committed to rolling out its first electric model in 2025.
Hybrid models are already available, accounting for 43% of the aforementioned 3392 vehicles sold in the second quarter. However, Ferrari’s ambitions don’t stop there; by 2026, nearly 60% of their models are slated to be hybrid or electric.
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