Yes true, 11 times faced bankrupt and 15 times fundraising to survive over last 10 years |
AM already bankrupt to all intents and purposes, loss making, drowning in debt, awful business model with poorly built products, the only way it’s staying in biz is to keep diluting muppet shareholders, there’s no real equity left, they don’t call U.K. shares “ the bug zapper trade for nothing “😂8514; |
And no doubt staff will want higher salaries... |
Credit dried up 12 months ago, with interest rates rising.
All those "billions" of eye balls on F1 have done NOTHING for AML sales.
Prices are too high, residuals are too low, AML are stuck in the same doom loop they always were: Can't raise prices because sales drop. Lower prices and it's not ultra luxury.
Full year results in Feb will be horrendous, all the money spent to update models, and barely any sales.
Dealer stuffing after the new CEO promised he wouldn't.
They are burning over a million per day, so the £200m they raised in November won't last long. |
Anyone trying to buy a house lately will know there's a heck of a credit squeeze happening, any day now it feels like there will be a stock market rout. A very high end luxury product might be available to the few individuals who don't need credit, but I suspect a high proportion of these cars are bought as company vehicles, to reward execs. Once residual values shrink, lenders will tighten up their conditions, the credit available will reduce substantially, and with that sales will shrink.
There will always be a market for luxury cars, but the size of that market will wax and wane, depending where one happens to be in the economic cycle. So if you put all your money into this gem, would you sleep well? |
The last £200m they raised won't last long, they will be needing more cash soon.
Be careful folks, full year results are coming in February and they will not be pretty.
My guess is cash will have run out by then too, so expect a cash raise any time around then. |
Analysts' Consensus
Mean consensus
OUTPERFORM
Number of Analysts
14
Last Close Price
411.50EUR
Average target price
471.38EUR
Spread / Average Target
+14.55%
High Price Target
531.61EUR
Spread / Highest target
+29.19%
Low Price Target
368.63EUR
Spread / Lowest Target
-10.42%
MarketScreener |
 Should I buy more Ferrari shares for my SIPP?
Ferrari stock has done very well in this investor’s SIPP portfolio. But is it attractively priced to warrant investing more money in it?
Posted by
Ben McPoland ❯
MOTELY FOOL
Published 30 November, 10:10 am GMT
Unfortunately, I’ve not had a spare €400,000 lying about recently for a Ferrari (NYSE: RACE). That’s the average selling price (ASP) for a new one nowadays. But I was able to rustle up enough cash to buy a few shares of the Italian luxury automaker a while back for my Self-Invested Personal Pension (SIPP).
The stock has done very well, rising 90% in just the past two years. This is impressive when most other luxury stocks have been smashed due to weak China sales.
Should I add to this winning stock today? Let’s pop the bonnet and take a look.
At first glance, Ferrari might look like just another manufacturer of sports cars. However, I think it’s more accurate to view the Prancing Horse as the world’s leading luxury brand.
In Q3, the company only sold 3,383 vehicles. But it could likely triple that figure in a heartbeat if it chose to. After all, the cars are built to order for ultra-high-net-worth individual clients, with the order book stretching well into 2026.
The reason it doesn’t sell more is because Ferrari needs to maintain an aura of exclusivity. CEO Benedetto Vigna argues that seeing a Ferrari on the road should be like encountering an exotic animal.
Unfortunately, even if I had €400,000, I probably wouldn’t be able to buy a new Ferrari. There’s a massive waiting list to even be considered as a potential customer, while 74% of cars made last year were sold to existing clients.
Ferrari will always deliver one car less than the market demands.
Enzo Ferrari
Serious pricing power
This scarcity gives the company incredible pricing power. As mentioned, the ASP is now around €400,000, up from €270,000 in 2015. Some special models exceed $1m.
The firm is also benefiting from customers enthusiastically paying up for increasing amounts of vehicle personalisations (extremely high-margin revenue).
As we can see below, Ferrari’s net margin has more than doubled inside the last decade, from 10% in 2015 to an incredible 21% today.
Most auto firms are high-volume, low-margin producers. Ferrari has flipped that on its head, with ultra-high margins on low volumes.
Brand image risk
Some investors might still question the investment case for this stock. After all, if the firm closely limits supply to maintain high demand, where’s the growth going to come from long term?
It’s a valid question, and Ferrari’s continued success is linked to the growing population of multi-millionaires and billionaires. Current trends indicate that this affluent (and aspirational) demographic is expanding, particularly in Asia.
This should enable Ferrari to gradually increase its annual production volumes while maintaining the brand’s exclusivity. It’s also moving onto the water by launching a sail racing team and building a racing yacht.
Yet the brand image is everything here. If that were to somehow diminish, then the company’s reputation and ultimately pricing power would be threatened.
Will I buy more shares?
I’ve been waiting for a decent pullback in the share price all year. There’s been a slight one — 13% since August — but it’s not enough for me. The stock’s still trading on a high forward price-to-earnings (P/E) ratio of 47.
That’s actually above luxury peer Hermès (43).
Therefore, I’ll continue waiting patiently for my opportunity to buy more shares.
Ben McPoland has positions in Ferrari. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. |
You can argue with Tony all you like...
But over the last few years, and since I entered the fray at £12, he has called this spot on!
I've not seen a single person able to construct a sensible argument against his facts!
Most are simply clueless "Chancers" that come and go in their droves... lol! |
No need to get personal here, most of us love the cars they manufacture, AML as an investment is a very different story.
I would guess taken private is where this may be heading. |
Most of the directors were buying shares above £19.
I'd say that looks pretty stupid now at £1. |
Of course they have "capital capacity" - look at the cheques that were written this week to bring money into the company when needed. Look at the announcements today from directors. That is why I used the word "capacity".You are so arrogant - you think that these people are stupid compared to you. |
"It's about the value of an iconic brand and having sufficient capital capacity to sail through the difficult periods"
Do they have the capital capacity?
It's statements like this which come across as idiotic when AML have raised 2bn in 4/5 years Stroll has owned it.
Almost £1bn since he said, "Mark my words, black and white, we don't need any more cash".
If you don't want to be called an idiot, stop saying idiotic things. |
If they did a 7% discount on placing isn't that a desperation?... |
Let me give you a tip which might help you get through life without being hated by everyone: stop accusing people of being idiots or having no sense of logic. |
I am still waiting on an answer to how this is good value?
Brand schmand, only idiots fall for brands. |
Which AML cannot do. They have to keep raising cash every few months to stay afloat.
Stroll has ripped through £2bn since he took over, with nothing to show for it.
Tell us Dealy, how can you see value as a shaeholder? And don't promise 10,000 sales like Stroll does, that's a pipe dream, AML historic average is 6000-7000 cars, which is hugely unprofitable.
There are already many DB12s with huge discounts for sale, so much for raising prices.
Football clubs get asset stripped in exactly the same way, load it full of debt to try and win something, if it fails sell out at a profit, leave the club in debt and fans raging.
You have to question the logic of someone who compares one of the worst performing companies ever on the LSE to football club investing, thinking that is a positive.
Buffet is so good because he has common sense. |
That valuation logic would make most football clubs appear worthless, yet they trade hands for billions. It's about the value of an iconic brand and having sufficient capital capacity to sail through the difficult periods |
7 idiots recommended your post.
It's the same post since IPO, great value BS.
AML's market cap has been down to £450m, today it's at £888m, so could still fall a long way and not be the lowest it's been.
Show us all how £1 per share is good value for a company losing hundreds of millions every year, with 1.5bn in debt, which is DOUBLE the market cap!
We want to see workings and maths, not some pishy opinions based on losing so much money you're desperate to see it go back up.
Deluded, share prices go up when good things happen, not 2 profit warnings in quick succession, raising cash to stay afloat for 3 months (at best) and potential tariffs to end growth in the US car sales.
You do realise without decent sales in China and the US, AML would be selling around 4500 cars instead of 6500? |
A truly iconic brand here with undeniably great cars along with new lineups plus strong new CEO in place and now, a very much undervalued/oversold company share price ready for takeoff, IMHO! |
Dealy, nonsense, Ferrari are doing just fine. |
Another fund raising and more dilution !!
Aston Martin forced to raise £210 Million through a share and private debt placings to shore up its balance sheet.
This coming just one day after Aston Martin announced its second profit warning within two months. |
They are performing similarly to hundreds of other companies who are collectively struggling with the same things. It's the economic cycle and it can turn in a positive way soon (lower interest rates, lower future energy cos, stimulus etc). What's the alternative? Mass unemployment? |
smoke and mirrors -another profit warning, who are they kidding, US tariffs will no doubt impact revenues next year, surpised it is still above a £1 |
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