Ferrari Outraced the Luxury Slump, Tuesday Was a Speed Bump

Ferrari shares took a high-octane dip Tuesday, falling 7% with power and torque.

The sports car manufacturer reported improved sales and earnings in the third quarter, extending its streak of outperforming other luxury auto companies this year. Markets, however, can be as finicky as a stick shift, and were spooked by some metrics.

A Wrench in the Top Gear

Ferrari’s share price is up just over 30% this year, lapping the likes of Mercedes-Benz Group (down 11.5%), Lamborghini and Bentley owner Volkswagen (down 24%), and Alfa Romeo owner Stellantis (down 40%). All three of those rivals also posted lower revenue in their latest quarter. 

Meanwhile, Modena, Italy-based Ferrari reported €1.64 billion ($1.8 billion) in sales in the third quarter, a 6.5% increase year-over-year, even as it shipped 76 fewer vehicles — or 3,383. Adjusted earnings before interest and taxes rose to €467 million from €423 million at a 28.4% margin, up 10% from last year. It also doubled down on a bullish upgraded guidance from August that foresees annual sales climbing 9% to around €6.5 billion. So why the reverse-gear share price on Tuesday?

• Shipments to mainland China, Hong Kong, and Taiwan — where luxury sales have slumped across the board — contracted 29%, although they rose 6% in the rest of Asia. While shipments to Europe, the Middle East, and Africa rose 2%, they fell by the same percentage in the Americas.
• But Ferrari, being the crème de la crème, only sells about 14,000 cars a year at very high margins, and with increasingly lucrative customizations. Catering to the richest of the rich and the global elite means it has less exposure to markets where there are downturns because it can rotate sales elsewhere.

Take Note: RBC Capital Markets, in a research note, said to pay little mind to Tuesday’s sell-off: “Expect shares to see support on a pull back especially given how unattractive autos is currently. Ferrari is a rare place to hide out.” Hiding out in a Monza SP2? We’ll take it.