Money for nothing

Yesterday, Ferrari’s stock fell by 15.4%, its worst day ever, after the company unveiled an updated long-term earnings guidance at its Capital Markets Day that came in below analyst expectations. We find the market reaction somewhat intriguing for several reasons. The forecast in question concerns 2030, which is still five years away. Ferrari is, in our view, first and foremost a luxury goods company, selling a limited number of cars at very high prices — most of them sold before they are even produced. In other words, the company largely controls its topline. If the concern is about the transition to electric vehicles, we believe the passion for the brand is not dependent on the engine type — just as it hardly matters whether a Hermès bag is made of leather or synthetic materials. What counts is brand power.

We are not invested directly in Ferrari in our European Value Fund, but in Exor, the Agnelli family’s holding company, whose share price fell by 8.7% in sympathy. While Ferrari represents around 85% of Exor’s market value, this means that investors in Exor today effectively pay €2.5 billion for all its other holdings, including stakes in Stellantis, CNH, and Philips, listed companies whose stakes are worth together more than 10bn EUR in the stock market . This is how far things have come.

Note: This publication is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.