Ferrari’s (NYSE:RACE)14-Month Rally “Pauses to Refresh”

Ferrari’s (NYSE:RACE)14-Month Rally “Pauses to Refresh”

Ferrari’s (NYSE:RACE)14-Month Rally “Pauses to Refresh”

$RACE. $TSLA, $AMZN, $WMT

Shares Ferrari (NYSE:RACE) began a long awaited healthy consolidation of its tire blistering 14 month rally over the past 2 weeks.

One analysts actually rates Ferrari a Sell based on the announcement that Tesla (NASDAQ:TSLA) is going to build a $200-K electric sports roadster to compete with Ferrari.

Imagine Tesla going from 1 Production Hell to another on purpose, the board should confine its CEO in a padded cell, and anyone who believe him should have their head examined.

He actually wrote in a note:

  1. Ferrari’s stock price has run without a corresponding improvement in its financial results.
  2. Competition is set to increase as Tesla just surprised customers and investors with a commendable product for its next generation.

I do not believe there will be a next generation of hypmeister Elon Musk’s Tesla, Inc.

The automotive world of the regular commuting people is expected to change in the next generation to automation. Meaning, that they will not have to drive to and from a downtown or suburban job or office. Perhaps they will drink and play cards instead.

But, Ferrari is not in that category of Car or Driver, and it is the #1 performer in the automotive sector world wide.

Purchases in this Top Tier of the auto industry are accelerating much more quickly than those of the pedestrian cars and crossovers catering to the Walmart and Amazon shoppers.

Now, the Tier 1 sector is shift into an even higher sales gear.

Over the past 5 years, the 5 brands that sell their cars for $200,000 and up; Bentley Motors, Ferrari, Automobili Lamborghini, McLaren Automotive, and Rolls-Royce have collectively managed a 51% increase in the annual number of Supercars sold.

In Y 2016, 30,000+ of these exotic cars sped out of dealerships around the world.

During the same frame, the global auto market as a whole failed to keep pace, growing by just 23%, according to the data.

Underlying this luxury product push are some very strong economics.

The world now has far more rich people than it did 5 years ago. That thanks to Bullish Stock markets, there are now 226,450 or UHNWI’s (ultra high net worth individuals) meaning those with assets of more than $30-M. Those ranks have swelled by 21% since Y 2012.

And Ferrari, Lamborghini, and Rolls-Royce are setting up to make SUV’s (in Ferrari’s case a FUV), they are following Bentley into that market.

In coming years, all 3 Supercar makers promise to unveil utility type vehicles, they do not call them that however.

These Supercars will sit higher and come standard with AWD (all-wheel drive) and room for dogs and cargo, where once there was only room for a briefcase and/or handbag.

That being on the cards I expect annual sales of ultra-premium vehicles to increase by at least 20% in the next 5 years with Ferrari leading the race at 23 – 25%. And that explosion with reflect directly on the Maranello outfits bottom line, as it is standing alone the best of the 3.

Ferrari’s shares finished on their highs Monday in NY, at 110.18, +1.01, or +0.93%

HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Neutral (-0.13) Neutral (-0.17) Neutral (-0.19) Neutral (0.08)

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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