Starting with the problems

Many (myself included) questioned whether Ferrari’s first fully electric model was a step too far from the brand’s heritage. The Luce’s design looks more like a luxury technology product than a traditional Ferrari.

However, the Luce launch only explains part of the share price weakness over the last year. It has more broadly been due to rethinking the firm’s growth prospects. Last year’s company presentation suggested revenue growth could slow to around 5% annually through 2030, a notable deceleration from the double-digit growth rates investors had become accustomed to. For a stock that had traded at a high valuation for years, any sign of slower growth was always likely to trigger a reset in expectations.

There are also broader concerns surrounding luxury electric vehicles. Rival manufacturers have delayed or scaled back EV programmes after seeing weaker-than-expected demand among wealthy buyers. Some investors fear Ferrari may be entering a market segment that simply lacks the enthusiasm needed to justify the investment.

A fall too far

Despite the fall, there are a few reasons why I think the stock could be cheap right now. To begin with, Ferrari remains one of the most profitable carmakers in the world, generating operating margins close to 30%. At $640,000, the Luce could be another car that can generate serious money for the company. As a potential shareholder, that’s what I ultimately care about.

Further, the Luce is only one model within a much broader product pipeline. The car is only likely to account for a small percentage of Ferrari’s overall sales, meaning the market may be exaggerating its long-term significance.

Based on the share price move, I think the market has reacted sharply and knee-jerked. When the dust settles, I believe the dip will be bought, as sentiment has been driven more by subjective opinions than by financial metrics. We can all have a view on whether we like the looks of a car, but that view is only really important to Ferrari’s target clients.

A balancing act

Of course, risks remain. A failed Luce launch could damage Ferrari’s carefully cultivated image, while a global economic slowdown could hit luxury spending. There’s also the possibility that electric Ferraris never achieve the desirability of their combustion-engine predecessors. But for long-term investors willing to accept some uncertainty, I think the recent sell-off may offer a good opportunity to buy close to 52-week lows.

Should you invest £5,000 in Ferrari right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ferrari made the list?

Jon Smith has no positions in the shares mentioned.

The post Is Ferrari now a cheap stock to buy after the EV launch controversy? appeared first on The Twelfth Magpie.

We’ve got one of those now, as Ferrari has nosedived 35% since July. Yet it’s still up 64% over five years and 550% since IPO in 2015 (with dividends on top). So buying the dip has worked out well for investors in the past.

But with Ferrari’s first full EV really dividing opinion, should I buy more shares? Or even sell?

A radical departure

I’m sure Ferrari needs no introduction as it’s one of the world’s premier luxury goods company, with incredible profit margins and a unique brand. Due to their scarcity and powerful roaring engines, the vehicles still turn heads today.

Now, looking back at my original investment notes, I flagged the pivot to electric vehicles (EVs) and potential brand damage as risks to monitor moving forward. These are flashing for me now after the firm unveiled its first EV — a five-seater called Luce — earlier this week.

After seeing the photos, I was quite shocked, as this is a massive departure from the brand’s DNA and aesthetic. Rather than having a fierce road presence, this is the sort of family car I’d expect to see nipping down to the local Co-Op.

EVs will make up 20% of Ferrari’s global sales by 2030. But the Luce is set to start at €550,000 (roughly £470,000). Will there be much long-term demand at that price? Will it hold its resale value? These are, of course, unanswered questions.

Moreover, I worry that having the Prancing Horse logo on this experimental design will damage the brand. If a Ferrari doesn’t look at all like a Ferrari, what’s the point? One analyst called it a “mix between a Honda Accord EV and Tesla 3“.

Finally, there’s a risk Ferrari might not recoup the significant R&D costs of this car. It reminds me of Jaguar’s EV concept car launched a while back — that also polarised opinion.

Am I overreacting?

Of course, I could be wrong, as some people seem to like the car. Sir Jony Ives, the former Apple design chief behind the iPhone and iPad, was involved in its minimalist design.

The firm says it’s “an entirely new Ferrari” (more for families than traditional ‘ferraristas’). And it certainly has lots of innovative tech features inside, so could sell well with new customers in China’s massive EV market.

Plus, the Luce can do about 193 mph, so that would set it apart in the Co-Op carpark.

Should I buy more shares?

After the unveil, the stock dropped 6%, leaving it trading at 26.8 times next year’s forecast earnings. That’s a noticeable discount to previous years, though probably reflects US tariffs, EV uncertainty, a steadier growth profile, and a fragile luxury market.

Weighing things up, I’m going to give Ferrari the benefit of the doubt here. The fundamental business model remains rock-solid and Ferrari’s order book extends towards the end of 2027, indicating there’s no immediate demand problems.

Ferrari remains a high-quality compounder, in my opinion. For now though, I’ll focus on cheaper stocks where I see better value.

Should you invest £5,000 in Ferrari right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ferrari made the list?

Ben McPoland owns shares of Ferrari.

The post Should I ditch Ferrari from my Stocks and Shares ISA? appeared first on The Twelfth Magpie.

To take advantage of this, I plan to add some money to my SIPP in February to buy the following share.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Massive pullback

The stock is Ferrari (NYSE:RACE), which has fallen 34% since hitting a July peak. This is one of its largest downturns since listing in 2015.

There are two things worrying investors. First, President Trump recently threatened a new round of tariffs on Europe, before walking them back. As Ferrari makes its cars in Italy, this has caused a bit of uncertainty (the stock’s down 8% year to date).

The major concern though relates to the luxury carmaker’s Capital Markets Day in October. Back then, management said it was targeting revenue of at least €9bn by 2030, implying a compounded annual growth rate of around 5%.

Operating profit’s expected to grow at 6% over this time, reaching €2.75bn. While that would translate into an incredible margin of at least 30.5% — unheard of in the automotive industry — the growth rate disappointed the market. It’s well below Ferrari’s historical average.

Compounding matters was the stock’s premium valuation. Put simply, investors have become less willing to pay up for slowing growth.

So why am I bullish?

Having followed Ferrari as a shareholder for many years now, my strong suspicion here is that management’s being ultra-cautious with this guidance. Three things make me believe this.

One is that Ferrari has a history of setting conservative targets only to crush them. For example, the firm’s on track to hit, or exceed, its previous 2026 profitability goals – set back in 2022 – a full year early.

Second, this plan covers a five-year period (2026-2030). When setting targets half a decade out, especially given the volatile geopolitical environment, management said it’s prudent to bake in some conservatism. 

Finally, there’s no indication that ultra-wealthy customers are turning away from the brand. Quite the opposite. All 799 units of the limited-edition F80 immediately sold out, even with a base price of around €3.6m a car. The overall order book extends well into 2027.

All this leads me to believe that Ferrari will beat these targets, which I think will become obvious to investors before 2030. In the meantime, the company’s begun repurchasing shares as part of a five-year €3.5bn buyback plan. 

A high-quality compounder

Of course, I could be wrong. A breakdown in trading relations between the US and Europe could impact earnings and sentiment. Meanwhile, the stock’s trading at 29 times forward earnings, so it still isn’t conventionally cheap. This adds another element of risk.

However, Ferrari’s a high-quality compounder that I want to remain invested in long term. It has industry-leading margins, a durable luxury brand, loyal super-rich clients, and truly extraordinary pricing power.

Finally, it’s worth noting that analysts have a target price of $453, which is 35% higher than the current level. This is a rare mismatch.

As such, I intend to take advantage of the 34% dip in February and I reckon long-term investors should also consider doing so.

The post 1 luxury stock I’m doubling down on in my SIPP in February appeared first on The Twelfth Magpie.

The last time it reported an annual adjusted profit was in 2018. Not surprisingly, the stock’s fallen in value by 99% since IPO.

On the other hand…

In contrast, Ferrari (NYSE:RACE) has seen its share price rise by over 250% since October 2018. Unlike the British sportscar maker, the Italian legend has been able to make cars profitably.

And a look at the results for the two companies for the nine months ended 30 September illustrates how different their financial performances have been so far this year.

Ferrari has sold nearly three times more cars, reported a gross profit margin that’s 23.3 percentage points better, and achieved an average selling price that’s nearly twice as high. But most importantly of all, it reported a pre-tax profit per car sold of around £131,500 compared to a loss of £75,500 for Aston Martin.

However, despite this, Ferrari’s share price has struggled in recent weeks.

What’s wrong?

In October, it told investors that revenue for 2025 was likely to be €7.1bn and that EBITDA (earnings before interest, tax, depreciation, and amortisation) would be around €2.7bn. Both of these were higher than analysts were expecting.

But looking ahead to 2030, the ‘experts’ were apparently disappointed with the company’s forecasts of sales and earnings of €9bn and €3.6bn respectively.

Also, by the start of the next decade, electric vehicles are now expected to account for 20% of all Ferrari sales, compared to the 40% previously stated. Since these announcements, the group’s share price has fallen nearly 13%.

Indeed, a 13% improvement in earnings over five years isn’t particularly impressive.

Both Ferrari and Aston Martin are suffering from a downturn in the luxury goods market. Incomes are under pressure and Trump’s tariffs are hurting sales in North America, which accounts for around 30% of each brand’s sales. Also, switching to electric vehicles is expensive and technically challenging.

Could do better

However, I reckon Aston Martin could improve its result at a faster rate than Ferrari. Like its rival, it makes some beautiful cars and its brand is recognised across the world. Don’t get me wrong, I’m not expecting it to be profitable any time soon but I think its cost-cutting initiatives and upcoming new car launches could see its bottom line improve quicker.

Importantly, its vehicles are cheaper, which could be an advantage in a difficult market.

Significantly, the group’s currently (14 November) valued at 2.9 times adjusted EBITDA compared to a multiple of 25.8 for Ferrari. Suddenly, the British group looks much more attractive.

However, Aston Martin might not be a public company for much longer. According to the Financial Times, its chair is in talks with Saudi Arabia’s sovereign wealth fund to take the group private. This could be further evidence that the sportscar maker is seen as offering good value.

Even so, I like the companies I invest in to be profitable or, at least, able to demonstrate a clear path to being in the black. Unfortunately, Aston Martin meets neither of these criteria. As for Ferrari, its stock is too expensive for my liking.

The post Does the Ferrari or Aston Martin share price offer better value? appeared first on The Twelfth Magpie.

Should I now sell? Let’s discuss.

Investor update

The culprit for the sell-off was the luxury carmaker’s Capital Markets Day event. In this, management set out its guidance for 2030.

By then, it expects net revenue of €9bn and at least €2.75bn in operating profit (30%+ margin). That will be up from this year’s €7.1bn and €2.06bn (29%), respectively.

Growth is expected to come from a richer product mix, limited-edition models, and higher personalisation revenue, supported by steady racing and lifestyle income. 

Ferrari plans to launch an average of four new cars per year. And it’s on track to start deliveries of its first full-electric model (Elettrica) by the end of 2026. This EV will have a range of more than 530km (329 miles).

Looking ahead, the company plans to return €7bn to shareholders between 2026 and 2030. This includes €3.5bn in dividends (with the payout ratio raised from 35% to 40%), and €3.5 bn in share buybacks, beginning 2026.

So what’s the problem?

There appear to be three issues here. Firstly, Ferrari was originally aiming for 40% of total sales to be EVs by 2030. Now, it has cut that to 20% due to lacklustre demand for electric sportscars among the super-rich.

Second, the financial guidance for 2030 was weaker than expected. Wall Street was collectively anticipating more like €9.8bn in revenue, with higher profits. Ferrari is normally very predictable, so this will have spooked investors.

Finally, the stock was very highly valued prior to this dip, at around 40 times forward earnings. So it was priced for perfection, and this guidance wasn’t perfect. Therefore, the sell-off makes sense.

Will I sell?

In my opinion, Ferrari’s biggest challenge/risk remains the EV transition. It reportedly plans to sell EVs at higher price points. The Elettrica is expected to cost at least €500,000 before personalisation, according to Reuters. Presumably, this is why the 2030 figures are lower than expected (it will now sell fewer EVs).

Stepping back, I’m not too worried. In fact, I’m glad the EV strategy has been modified. Customers likely pay up to hear the engine’s full-throated roar, not the “unique characteristics of the electric powertrain“.

Meanwhile, demand still far outstrips supply, with the order book stretching well into 2027. This underpins pricing power. Active clients now total 90,000 (20% higher than 2022).

This incredible quote from the firm sums up the brand’s longevity (and scarcity): “Since the company’s founding, Ferrari has produced approximately 330,000 vehicles, over 90% of which are still in existence today and require our constant care.”

Nowadays, all Ferraris are uniquely personalised. Leaning into this, it will open two ‘Tailor Made’ centres in Tokyo and Los Angeles in 2027.

It’s also worth mentioning that Ferrari has achieved its previous profitability targets for 2026 one year in advance. I strongly suspect this will happen again by 2030. Guidance looks conservative.

For these reasons, I’m not selling. Indeed, with the stock now trading at 33 times 2026’s forecast earnings — versus the 10-year average of about 40 — it might be worth considering.

If it keeps falling, I’ll invest more money.

The post Down 18% in days! Should I sell this luxury brand in my Stocks and Shares ISA? appeared first on The Twelfth Magpie.

By contrast, Ferrari assembles its exquisite sportscars in a quiet town in northern Italy. It’s run by a professorial CEO who’s pretty low-key, and the firm isn’t interested in robotaxis, humanoid robots, or Dojo supercomputers.

As exciting as these Tesla ventures are, I’m backing Ferrari over Tesla in my portfolio. Here’s why.

Iconic brand

Let’s start with the brand, which is unrivalled, in my opinion. Ferrari deliberately limits production to under 15,000 vehicles a year to promote scarcity and exclusivity. For context, Porsche delivered more than 20 times that amount last year (over 300,000).

This stays true to the strategy of the founder (Enzo Ferrari), who said the firm will always deliver “one less than the market demands“. It has also been deliberately limiting sales to China, so as not to overexpose the brand there yet. China can wait.

I mean, what other company does that? Tesla attempts to sell as many cars as possible in China, as does Porsche and nearly all other automakers.

Unfortunately, I fear Tesla’s brand has genuinely been damaged in recent years by Musk’s toxic foray into politics. Look at the resale value of a Tesla, which has fallen sharply over the past 18 months, whereas Ferrari’s remains strong.

Incredible pricing power

If I want to buy a new Tesla, I can just log on the app and place an order. Not so a Ferrari. Around two-thirds of new vehicles are sold to existing customers (very rich ones, including billionaires).

The upshot of this powerful dynamic is that Ferrari has enormous pricing power. It can keep volumes low and still grow profits.

Again, by contrast, Tesla’s struggled here. It’s suffering from falling electric vehicle (EV) sales despite repeatedly lowering prices, whereas Ferrari’s order book extends over two years.

We always want to push the quality of revenues over quantity.

Ferrari CEO Benedetto Vigna.

Financials

Turning to the numbers, Tesla’s automotive revenue last year fell 6% to $77.1bn, though overall revenue rose 1% due to strong growth in its energy business. Profitability dropped sharply.

The Italian automaker’s annual revenue grew 11.8% to €6.7bn, with everything else up double digits, including earnings per share (+22.6%). Margins are industry-leading and Ferrari also pays a modest but growing dividend.

Valuation

In reality, neither company’s valued as a run-of-the-mill car manufacturer. Tesla’s seen as a tech/AI company, and could be worth considerably more if it can eventually capture a big chunk of the global robotaxi market.

If it can’t, the stock’s price-to-earnings (P/E) ratio of 184 is likely unsustainable, as Musk has warned.

Meanwhile, Ferrari’s valued as an ultra-luxury goods firm, which is reflected in a forward P/E ratio of 46.

The risk with this premium is that investors demand perfection. If Ferrari’s margins disappoint when it reports Q2 earnings today (31 July), investors might sell.

Also, Ferrari’s first fully electric car is upcoming. Were that to flop, it could damage the brand and cast doubt on the EV strategy.

However, despite the high valuation, I believe it’s worth considering, especially on dips (I’m hoping for one myself). The wealthier some get, the more Ferrari stands to gain.

The post Why I’m betting on Ferrari over Tesla stock appeared first on The Twelfth Magpie.

Here are three holdings I expect to do well over the next decade. As such, I think they’re worth considering.

Pricing power

Let’s start with one powerful trend that’s ongoing: the rise of the world’s super-rich. According to Oxfam, the number of billionaires jumped 7.3% last year to 2,769. Multimillionaires are also increasing, especially in Asia.  

This is an incredibly supportive backdrop for luxury carmaker Ferrari (NYSE: RACE). Last year, the firm shipped just 13,752 cars, with roughly 81% of those going to existing Ferrari clients, and nearly half to buyers who already owned more than one Ferrari. 

The company deliberately limits production to maintain brand exclusivity. This has two powerful consequences. First, it gives Ferrari enormous pricing power. With demand far outstripping supply, it can raise prices, while still keeping first-time customers waiting in line.

Second, ultra-wealthy collectors create an incredibly resilient customer base. That makes the business less exposed to economic downturns.

One risk worth highlighting is that Ferrari has just postponed the timeline for its second EV model due to a lack of customer interest. If customers aren’t happy with the first Ferrari EV in 2026, this could harm the brand’s image.

Like its cars, Ferrari stock is far from cheap. But I think it will head higher by 2035 as aspirational multimillionaires multiply.

Robotaxis

Sticking with the car theme, we have Uber (NYSE: UBER). In Q1, trips grew 18% year on year to 3bn, while monthly active customers rose 14% to 170m.

Over the next decade, I expect driverless taxis to go mainstream. Google’s Waymo is now doing over 250,000 paid robotaxi rides a week in a handful of US cities, taking the total to more than 10m. But there are dozens of other autonomous vehicle start-ups.

Rather than spend millions marketing their own apps, I expect most to tap into Uber’s vast existing global network. Many have already signed partnerships, including Waymo in some cities.

One that hasn’t, though, is Tesla, which is tentatively launching its own robotaxis right now in Austin, Texas. Were Tesla to succeed, this could be a direct threat to Uber’s competitive position, at least in the US.

However, if robotaxis successfully scale up, there’s a chance that Uber becomes more profitable, given that drivers are its biggest cost today.

War on cash

I want to end with a more obvious unstoppable global trend, which is the shift towards digital payments. Whether it’s smartphones being used in the real world or for shopping online, the war on physical cash is relentless. 

One obvious beneficiary is Visa (NYSE: V). In its last fiscal year, there were nearly 234bn transactions processed on its networks, up from 192.5bn two years before. And people spent a whopping $13.2trn using Visa cards worldwide!

Given that Visa takes a small cut of all the action, the firm is incredibly profitable. Its net margin sits comfortably north of 50%.

We’re seeing the digital payments trend now spreading to Africa, Latin America, and the wider Asian region. Barring regulatory intervention in Visa’s business, which is a key risk, I expect the stock to be much higher in 2035 than it is now.

The post Over the next 10 years, I think I’ll make money from these 3 stocks in my ISA appeared first on The Twelfth Magpie.

Over the long term, both have been cracking investments. The Tesla share price is up 1,651% across a decade, while Ferrari has delivered a 746% return since it went public in late 2015.

In my own portfolio, I own Ferrari stock but not Tesla (though I have been a shareholder in the past). Here, I want to take a look at how both firms have been doing recently.

Recent share-price performance

Let’s start with the share prices so far this year. Tesla’s is down 31.6% while Ferrari’s is up 12.2%. So, over this short time frame, the latter is easily winning the race.

However, it hasn’t been a totally smooth ride for the Italian carmaker as its shares fell nearly 22% between late February and early April. This was largely due to President Trump’s on-off tariff policies, which have sent shockwaves of uncertainty through the stock market.

Results

Next, let’s consider how both firms got on financially in the first quarter (Q1). This is where some major differences emerge.

For Tesla, it has been contending with weak sales, fierce competition, and some brand damage from CEO Elon Musk’s outspoken views on various issues. These challenges were reflected in the results.

Revenue fell 9% year on year to $19.3bn, with global deliveries dropping 13% to 336,681 vehicles. Operating profit slumped 66% to $399m, resulting in a 2.1% margin as Tesla continued to invest heavily in robotics and artificial intelligence (AI). All these figures were worse than expected.

By contrast, Ferrari posted some impressive Q1 numbers earlier this week (6 May). Revenue increased 13% to €1.8bn, while net profit jumped 17% to €412m. Both figures were slightly higher than expected. The operating margin came in at 30.3%!

What’s amazing is that Ferrari achieved this growth without really increasing production. Shipments edged up just 0.9% to 3,593 cars, yet there was double-digit growth across the board.

This small shipment increase was deliberate rather than due to weak demand. In fact, Ferrari’s order book now extends into 2027!

The secret sauce is incredible pricing power combined with continued high demand for lucrative vehicle personalisations. Unfortunately, Tesla’s pricing power has waned significantly as it competes with low-priced Chinese EV makers worldwide.

Different beasts

In reality, neither is valued as a bog-standard car stock. Tesla’s massive $865bn market value is based on future growth potential in AI-powered robotaxis and humanoid robots. Therefore, while it’s struggling now, its growth could accelerate in future.

The risk is that the stock’s trading at 152 times earnings, meaning it may fall substantially if its AI/robotics ambitions don’t start bearing fruit over the next couple of years.

Meanwhile, at 47 times earnings, Ferrari is valued as a leading ultra-luxury goods company. But it has warned that US tariffs on EU-made cars could hurt profitability this year. So this is a risk.

Tesla stock is only suitable for investors with a very high tolerance for risk. Ferrari is less risky but still a bit pricey.

Personally, I’m happy with my choice and intend to keep holding Ferrari for years.

The post Tesla vs Ferrari: which stock is leading the race in 2025? appeared first on The Twelfth Magpie.

American exposure

In terms of volume, 32% of the British icon’s 2024 sales were made through dealers in the Americas. Although a breakdown of vehicle sales by country isn’t available, we do know that £591m of revenue (37.3%) came from the United States.

Proportionately, this is slightly more than some of its rivals, but it’s not massively different. For example, Ferrari (NYSE:RACE), generated 28.8% of its top line in America.

But setting aside the recent uncertainty surrounding import taxes, the share price of Aston Martin’s rival has performed much better.

This makes me think investors have more concerns than just tariffs. And a look at the 2024 accounts for the British and Italian car makers is illuminating. It’s a bit like comparing oil and water.

Getting into the detail

Aston Martin sells fewer cars than Ferrari and, concerningly, the gap between the two is growing.

Also, the Italian sports car maker commands a higher average selling price and gross profit margin. In my opinion, this is a strong indication that its models are seen as being more desirable. In theory, this means it should suffer less from Trump’s tariffs.

However, to strengthen its balance sheet, the British marque has recently secured additional investment from its largest shareholder. Also, prior to Trump’s announcement, it was expecting a better 2025, largely on the back of the first deliveries of its new Valhalla model.

And at the time of announcing its 2024 results, the company reconfirmed its medium-term targets. By 2028, it aims to have annual revenue of £2.5bn and a gross profit percentage in the ‘mid-40s‘.

What I think

But despite its beautiful cars, amazing brand and loyal customer base, I don’t want to invest in Aston Martin. It may have a price-to-book (PTB) ratio of less than one but it remains loss-making. Since floating in October 2018, it’s reported losses of nearly £2bn. And it’s a long way from selling enough vehicles to be profitable. In these circumstances, it’s difficult to value a company, and I wouldn’t be surprised if the stock had further to fall.

The company also appears to be lagging some its peers when it comes to fully electrifying its range. Its first full EV isn’t expected before 2030. BY contrast, Ferrari’s is due to be launched later this year. Having said that, the UK government has just announced plans to let smaller manufacturers continue to produce petrol cars beyond the current 2030 deadline, so that should help ease the pressure to ‘go green’.

However, despite the Italian company’s faster transition to EVs — and its superior financial performance — I don’t want to buy its stock either.

Its shares currently change hands for an eye-watering 44.7 times its 2024 earnings per share (EPS) of €8.46. For 2025, analysts are expecting EPS of €9.11. Even so, this implies a forward price-to-earnings ratio of 41.5. And it has a PTB ratio of over 17.

A bit like its fabulous cars, this is far too expensive for me.

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No, Ferrari is valued as an ultra-luxury brand. This is why the stock is often ranked among peers like Hermès International and LVMH (Moet Hennessy Louis Vuitton) rather than grubby carmakers like Stellantis and Ford.

While the stock has raced 185% higher in five years, it’s fallen 16% in just over a month. This pullback has prompted analysts at both Barclays and ​Kepler Cheuvreux to upgrade Ferrari stock to Buy from Hold.

Barclays said the company retains relative “safe-haven” status compared to other European automakers hit by US tariffs. Starting on 2 April, Ferrari will hike prices by up to 10% on some models in the US. This demonstrates the company’s pricing power.

Meanwhile, Kepler said: “This is the pit stop we were long awaiting to turn more positive.”

But should I buy more shares on the dip?

Safe haven

For starters, I agree that Ferrari stock is somewhat of a safe haven. President Trump’s 25% tariffs on auto imports aims to encourage more US car manufacturing. But Ferrari exclusively manufactures its supercars in Maranello, northern Italy, and that won’t be changing.

Customers value the fact that the cars are largely hand-assembled in the same historic factory in Italy. This craftmanship and heritage is an important part of the brand’s appeal.

Meanwhile, the company limits production to maintain exclusivity. As a result, the order backlog extends into early 2027 due to incredible demand.

In other words, you can’t just go out and buy a new Ferrari, even if you have the money. And existing owners have a far better chance of securing limited-edition models than newbies.

The result is extraordinary earnings visibility, which investors value highly. As long as the order book extends two years into the future, I think the stock will carry a significant premium to the wider market.

Of course, we can grumble about how large that premium should be, but the fact the company deserves one is hardly in doubt. Right now, the forward price-to-earnings ratio is 43, which is lower than a few months ago (just over 50).

Marginal margin pressure

Last year, revenue rose 11.8% to €6.7bn. Shipments totalled 13,752 units, up just 1%, yet net profit jumped 21% to just over €1.5bn. 

The main risk I see is some sort of damage to the brand. Ferrari takes incredible care of its reputation, but no brand is entirely immune.

It’s also worth noting that management sees a potential 50 basis point hit to margins this year due to tariffs. Then again, Ferrari’s operating margin was 28.3% last year, so it has a fair bit of flexibility.  

My move

Whether we’re comfortable with it or not, the rich are getting richer around the world. And that is undoubtedly a very supportive trend for ultra-luxury brands like Ferrari.

I already have a somewhat large position across my ISA and SIPP. The 16% dip isn’t large enough to justify me making it even bigger.

But for investors wanting to invest in the rising global wealth theme, I think Ferrari stock is still worth considering as a long-term holding.

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