Ferrari’s Stock Sags After Record Highs, Despite Strong Q2 Results

Ferrari (RACE.it) Analysis

The iconic luxury sports car maker released another strong quarterly report at the beginning of the month, with CEO Benedetto Vigna, speaking of "exceptional financial results" [1]. Revenues increased 14% y/y to €1.474 billion in the second quarter, Adjusted EBITDA (profits before interest, taxes, depreciation, and amortization) surged 32% y/y to €589 million, Margins widened to 40% and Net Profit jumped 33%.

In addition to that, Ferrari raised its full 2023 Revenue guidance to €5.8 billion (from 5.7 bln previously), driven mainly by the personalization options its customers choose for their cars, which are stronger than expected. On the other hand, EBITDA Margins outlook was reaffirmed at 38%, but that is still significantly improved over 2022 (34.8%).

The Italian manufacturer shipped 3,392 vehicles in the second quarter, which marked a decline on both sequential and yearly basis. This is still robust performance though and the CEO took note of a "very strong order book in all geographies".

These included the first Purosangue models, the firm's entry into the SUV segment (although the don't' use that designation). Ferrari is also moving into electrification and its hybrid models accounted for 43% of total deliveries in Q2, more than doubling from a year ago. Its first fully electric vehicle is expected to be unveiled in Q4 2025.

Ferrari's stock is having an amazing year, as RACE.it rallied nearly 50% in the first half of 2023. The surge culminated to the record highs at the start of July (300.05). The strong Q2 results and the robust guidance can lead to further gains and new all-time highs.

Markets did not react particularly well to the last earnings release though, perhaps finding the forward guidance underwhelming. RACE.it is losing ground in the current quarter and the underperformance makes it vulnerable to the 23.6% Fibonacci of the 2022 low/2023 high advance (268.45-267.32). Daily closes below it could open the door towards the 38.2% level (248.75-247.08), but we cautious around sustained weakness below the EMA200 (black line).

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Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 14 Jun 2024 https://cdn.ferrari.com/cms/network/media/pdf/2023_08_02 - Ferrari Q2 2023 Results Press Release.pdf

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