Q2/1H 2025 - Ferrari - Full Analysis
Removing potential margin dilution risk from tariffs & maintaining conservative guidance
At the time of writing, and as of the close in Milan, shares of the Prancing Horse cratered 12%, the biggest drop since the 2016 listing. Similar to Hermès, it seems investors aren’t pleased with an in-line report and continuation of a proven multi-decade controllable growth strategy that’s centered around exclusivity and high returns on capital.
For whatever reason, the focus has now shifted to whether Ferrari can sustain its high profitability amid slowing growth in sales volumes and pricing. As a reminder, the second half is expected to be softer because of the phase-out of the Daytona SP3 not being compensated for by the few initial deliveries of the F80 supercar in Q4. Everyone knows it (or should have known it).
We also have to remember that there’s a buyback program in place and no shares were being repurchased during Q2 (as Ferrari outspent its free cash in Q1).
Before we delve into the quarter itself, we’d like to say that this was one of the weirdest conference calls we’ve listened to (not kidding here). Not because of the management team’s presentation or the share price move, but because of the analysts posing very short-term focused questions, deducing speculative conclusions, and even stating the wrong facts.
Just to highlight one from RBC analyst Narayan:
Then next question was, it's really a response to Stephen’s question. I wonder if this is impacting the stock price right now, because I'm getting questions on it. Did you mention something about residual values being contemplated in the US? Maybe you could just put that to bed.
The answer to that question was pretty straightforward:
We haven't discussed anything in respect to residual value in the US (in this call). I don't know what you were referring to.
Well, to us, analysts better pay attention to what the management team really said instead of letting share price volatility dictate their post-earnings recaps.
Anyway, let’s get on with the this Q2/1H review.