Home 2020 F1: Ferrari (NYSE:RACE) is Committed!

F1: Ferrari (NYSE:RACE) is Committed!



Ferrari (NYSE:RACE) said it is committed to F1 after reports Thursday that the sport’s oldest and most successful team could walk away if a proposed budget cap for Y 2021 was set too low. Seems like Liberty Media got the word loud and clear.

Ferrari was prepared to quit F1 it was declared in a British newspaper headline that came from an interview with The Scuderia team Boss Mattia Binotto. Mr. Binotto did not mentioned the team was going exit F1, but the inference was there and it has been for the last few years.

What he did say is that Ferrari would not want to be put in a position of having to look at other options, besides continuing racing in F1, for deploying our racing DNA and budget caps would reduce F1 to a lesser formula.

Mr. Binotto told the paper that a drastic budget cut, called for by some teams as they face the fallout of the COVID-19 crisis, put at risk hundreds of jobs at the Maranello factory.

The $145-M level is already a new and demanding request compared to what was set out last June,” he said.

It cannot be attained without further significant sacrifices, especially in terms of our human resources.”

F1 is due to introduce a budget cap of $175-M in Y 2021 but teams are discussing reducing that.

Boss Binotto said the teams have different characteristics, some privately run while others were part of major manufacturers operating in different countries and under different legislation.

Therefore it is not simple and straightforward to make structural changes simply by cutting costs in a linear fashion,” he added.

We are well aware that F1 and indeed the whole world right now is going through a particularly difficult time because of the Covid-19 pandemic.

However, this is not the time to react in a hurry as there is the risk of making decisions on the back of this emergency without clearly evaluating all the consequences.

Red Bull Racing’s boss Christian Horner, whose team were dominant before MercedesAMG won the last 6 championships, is also opposed to a budget cap below $145-M. MercedesAMG is supportive of further budget cuts.

F1 has already delayed until Y 2022 the implementation of major technical rule changes planned for Y 2021, with teams using the same cars next year as this they will run this year.

The season has yet to start with 9 races called off, including the showcase Monaco Grand Prix in May which was cancelled.

Ferrari is the Aristocrat of the automotive sector.

Enzo Ferrari’s iconic Italian Supercar manufacturer claimed the title according to the latest Brand Finance Global 500 2019 report launched at the World Economic Forum in Davos.

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish, there is Key resistance 174.73, and support is at 156.99.

Our overall technical outlook is Bullish to Very Bullish in here, 2 of my 3 Key indicators are still Very Bullish.

Ferrari finished at 157.02, -1.00 Thursday in NY, the Maranello Outfit’s shares were raised to Buy from Hold at HSBC.

Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term luxury products investment, and I have called it at it at 200+/share long term, adjusting it to 200/share short term (after the virus) and siding with BAML to 230 long term for now.

Have a healthy day, Keep the Faith!


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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.