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Old 8th November 2019, 17:27   #1
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Default Ferrari's revenue & profit rise in a tough market

According to a media report, in the third quarter of 2019, Ferrari's revenues increased by 9% and operating profit increased by 12% year-on-year. Ferrari's shares have gained 77% and the company is valued at US$ 31 billion.

Ferrari's revenue & profit rise in a tough market-2020ferrarif8spider.jpg

The report suggests that Ferrari's customers are willing to pay a premium to personalize cars even during a recession. It is said that the company wants to be seen as a luxury goods company and not as a regular carmaker and that its operating profit margin is 25%, which is much higher than other carmakers.

Ferrari is expected to reduce its clothing and accessories line-up and is looking to move it upmarket with the help of Giorgio Armani. It could also open driving simulation centers and enter e-sports. The company hopes that these services and products account for 10% of the operating profit.

Among the Italian carmaker's upcoming cars is a hybrid supercar called the SF90 Stradale, while the Purosangue SUV is not expected for another couple of years at least.

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Old 8th November 2019, 19:00   #2
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Default Re: Ferrari's revenue & profit rise in a tough market

Talk of a recession. The current Ferrari lineup includes around 12 different vehicles including variants of the basic models like 488 Pista, F8 etc. I think this is where Ferrari trumps its rival from Sant'Agata. Lamborghini has only 3 core models whereas Ferrari has around 6-7. Ferrari is also quicker to introduce newer platforms and variants than Lamborghini I think.

With the upcoming Purosangue SUV, Ferrari's profits and valuation is only going to go higher.And people with deep pockets are going to queue up outside Maranello's gates to customize their prancing horses and adding insane amounts of money into Ferrari's account. Recession be damned.
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Old 9th November 2019, 20:45   #3
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Default Re: Ferrari's revenue & profit rise in a tough market

Recessions don't affect Veblen goods like these. In fact, Kering and LVMH have seen a 20% and 50% yoy rise as well, and they're pretty good proxies. I would buy and hold for the next 5 years - the SUV will really make their shares skyrocket.
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Old 9th November 2019, 21:38   #4
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Default Re: Ferrari's revenue & profit rise in a tough market

Millionaires and Billionaires might lose a small percentage of their new wealth because of market fluctuation. Its not a wonder that supercar market is hardly affected.

Hypercar market is getting over crowded with too many options. But I think Ferrari has a good lineup of cars for first time supercar buyers and that eventually shows up in their financial report.
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Old 10th November 2019, 10:00   #5
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Default Re: Ferrari's revenue & profit rise in a tough market

Terms like "Recession", "Downturn", "slowdown" don't apply to super luxury goods & services. Simply because they are immune to market forces which us mortals are subject to. A few percentage or even double digit fall in stock price is chump change & these individuals are well hedged even for major economic crisises. So I think the title of the thread itself is redundant.
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Old 11th November 2019, 00:59   #6
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Default Re: Ferrari's revenue & profit rise in a tough market

I think there is more to this topic than what meets the eye. Ferrari is and has always been very careful about who they allocate cars to. They purposely limit the amount of cars that they manufacture and sell so that there is a demand and desire for their cars. Hence also resulting in their cars holding their value. You can't just walk into HR Owen and order a 488 Pista. You need to create a relationship with the dealer, buy some lower models and then you might be seen worthy by the people at the factory to buy more limited edition models.

On the flip side, Mclarens depreciate a lot, especially because they are willing to provide supply if there is demand. Aston Martins are not selling.
We must applaud Ferrari for playing their cards right.
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Old 11th November 2019, 14:10   #7
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Default Re: Ferrari's revenue & profit rise in a tough market

There might be a slump in the Maruti Alto's sales, but the Mercedes S-Class still has a waiting period! That pretty much sums up how a sluggish economy affects the different strata of society. To the super rich, a bad economy hits their investments & business to a certain extent, but not their lifestyle. There is almost no difference to daily life, vacations or the cars they drive.

Plus, Ferrari has always sold a slightly smaller number of cars than it has demand for. The trend mentioned in the thread title should come as no surprise.
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