Ferrari’s (NYSE:RACE) CEO Unlocked the Value in the Iconic Supercar Maker

Ferrari’s (NYSE:RACE) CEO Unlocked the Value in the Iconic Supercar Maker

Ferrari’s (NYSE:RACE) CEO Unlocked the Value in the Iconic Supercar Maker

$RACE, $FCAU

Investors are misreading CEO Marchionne’s objectives, unlocking value is not his goal; he is trying to ease the Agnelli Family, which controls Ferrari and Fiat-Chrysler (NYSE:FCAU), out of the car business.

He is retiring in a few years, and the car business is capital-consuming, low-margin, and depressingly cyclical. The Agnelli’s and their private-equity concerns would like to concentrate on other opportunities going forward.

Back to Ferrari

When Fiat Chrysler Automobiles spun off Ferrari in an IPO in October 2015, there was plenty of skepticism around a Key aspect of the plan, that being increasing Ferrari sales by thousands of cars a year.

Sales had been capped at 7,000 annually, but Fiat-Chrysler’s CEO Sergio Marchionne wanted more.

The risk was losing Ferrari’s aura of exclusivity.

The fears were unfounded, and Ferrari’s stock has been on a Bull Run, up almost 130% over the past year and 80%+ YTD. The iconic Italian automaker has outperformed every other asset in the sector, including Tesla (NASDAQ:TSLA), a bit player in the sector, but a speculator’s darling Vs Ferrari’s emerging Aristocrat status.

Ferrari’s success has encouraged considerable speculation about which brand Mr. Marchionne will spin off next.

Some are betting it is Maserati, which has seen a Y 2017 sales spike thanks to the debut of the Levante SUV. Others suggest Alfa Romeo will be next, I say neither.

Meanwhile, after the breakout Monday, I see RACE at 125/share sooner rather than later.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 112.47 18 September 2017 2.42 111.75 112.76 111.31 506,027
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Bullish (0.38) Neutral (0.08) Very Bullish (0.65) Bullish (0.42)

Stay tuned…

 

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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