Ferrari outshines EV makers like Tesla

It wasn’t a question of which automaker’s stock performed best this year. It was about which stocks managed to escape the worst selling pressure of the year.

After a massive rally in auto stocks in 2021, this year has been a daunting one with the EV startup bubble bursting, low vehicle inventories and rising interest rates. This was on top of recession fears and “demand destruction” for industry-wide sales.

Many of the world’s largest automakers have performed well financially this year, but that hasn’t been enough to offset outside economic concerns that their most profitable days may be delayed.

Morgan Stanley analyst Adam Jonas wrote in an investor note that “FY2023 will be a difficult year due to weaker demand (higher interest rates), deflation (lower price/product mix) and unfavorable shifts in the EV supply/demand balance. We are ready for the outlook,” he said. Early this month.

The FactSet Automotive Index, which includes automakers and aftermarket parts, is down about 38% so far this year as of Tuesday’s close. All major automakers and EV startups experienced his double-digit declines this year, partially or fully offsetting 2021 increases.

Many once-promising EV startups have been among the biggest losers. Some companies ran into capital problems or were unable to expand production as expected. Rivian, Clarity, canoe When Nicola It’s down more than 76% year-to-date.

Traditional automakers have managed to contain the decline in stock prices better than EV start-ups. But America’s largest automaker – general motors When ford motor – Both experienced declines of more than 40%, with no surprise rises at the end of the year. Stella, Nissan, Toyota When Volkswagen More than 25% decrease.

The lowest rate of decline was Ferrariwhich is down about 18% year-to-date, making it the best-performing automaker stock of the year.

What drives that performance? First of all, the storied manufacturer of luxury sports cars is unlike any other automaker.It is expected to sell about 13,000 jewel-like sports cars by the end of the year. Less than it sells in a day. But FactSet estimates that these coveted cars will ship with an average selling price of around $322,000 apiece.

Even at that price, Ferrari has a long waiting list. The company limits annual production to maintain pricing power and exclusivity. This is a happy situation that gives Ferrari a very high profit margin and ensures that the factory is unlikely to go idle any time soon.

Ferrari CEO Benedetto Vina said on Ferrari’s third-quarter earnings call that by early November, most of this year’s Ferrari models had sold out, suggesting demand for 2023 is fine. I expect.

Vigna has good reason for that view. Ferrari has several to keep its waiting list long, including his first SUV-like car, his sleek V12-powered four-door called the Purosangue, which starts at around $400,000 in the US. We have a new model. Four-door Ferrari – in high demand. Ferrarri hasn’t started shipping the Purosangue for months yet, but the company temporarily stopped taking orders last month after selling out his first two years of production.

“The company’s focus on the unique quality and performance of its vehicles is unwavering, driven by resilient financial performance, significant intangible brand value and a true sense of ownership,” BofA Securities analyst John Murphy said in an investor interview. It has driven the status of luxury goods.” The Dec. 13 notes echo Ferrari’s buy rating and his $285 price target.

next, Teslahas proven to be one of the best auto stocks for investors in recent years thanks to a tech-like valuation from Wall Street. .

Much of Tesla’s stock decline came after CEO Elon Musk bought social media platform Twitter. The stock has fallen more than 50% since trading closed on October 27.

Oppenheimer analyst Colin Rush said in a report earlier this month that downgraded the stock’s performance from outperforming: We believe that financial performance will be constrained and that there may be a continued overhang against TSLA.”

Wall Street analysts expect 2023 to be another volatile year for auto stocks. Here’s how the legacy automaker and his upstart EV startup performed this year.

• Ferrari (RACE): -18%
• Stellantis (STLA): -25%
• Toyota (TM): -26%
• Nissan (NSANY): -35%
• General Motors (GM): -43%
• Volkswagen (VWAGY): -46%
• Ford (F): -46%
• Fisher (FSR): -57%
• Tesla (TSLA): -68%
• Child (NIO): -68%
• Rosetown (RIDE): -69%
• Nikola (NKLA): -75%
• Rivian (RIVN): -82%
• Lucid (LCID): -83%
• Canoe (GOEV): -86%

– CNBC’s Michael Bloom Contributed to this report.