Ferrari Doesn’t Want to Slow Down
Sergio Marchionne, late former Chairman of Ferrari, was scorned four years ago for saying his brand could be worth $11 billion at its initial public offering (IPO). It’s now worth three times that, more than Ford, General Motors, and even its former corporate parent, Fiat-Chrysler.
It’s got the premium car market under its thumb. You can put in hot laps with a Lamborghini or Zonda, and a petrol head might argue these cars are greater feats of engineering. But up and coming, rising investors have their sights firmly set on only one ‘you made it’ driving machine. There’s nothing like a Ferrari!
The combination of heritage, wide profit margins, and half of all customers returning to buy again and again gives Ferrari shares that special something. The repeat customers aren’t fretting about the state of the economy either; they’re already wealthy enough. The business has proven to have some recession-resilience.
In particular, this recession has been a challenge, though, as production facilities are forced to shut. The Invstr community has shown no mercy whatsoever, short-selling Ferrari with 13% of the float. There’s one element in frame that concerns investors more than anything: the tat.
It’s only natural to pursue growth in new arenas, but merchandising low-quality goods with the prancing horse logo might is not in the best interests of heritage. You can buy Ferrari clothing, Ferrari watches, Ferrari shoehorns, Ferrari anything these days, but it’s not a Ferrari supercar.
This is a car brand, the best there is, and it’s now deciding to reverse down the road and focus more on that core trade. A rare partnership was signed last year with Giorgio Armani to bear the prancing horse logo, and now that it’s posting numbers, analysts are praising the pivot.
Invstr community? Does Ferrari deserve a second chance?