Investors are still cautious about Ferrari. Are they right?

Ferrari, the Italian supercar maker, reported its third quarter 2025 earnings and revenues above market expectations on November 4. About a month before that, the company experienced the largest collapse in its history, and its securities have not yet fully recovered. Investors are still wary of the company. Some consider the Italian company an example of discipline. Others believe that its management is too cautious.

Ferrari's net profit from July through September totaled €382 million, up 2% year-over-year and 4.1% above the LSEG consensus forecast. Revenue rose 7.4% to €1.77 billion, exceeding the Bloomberg consensus - also by 4.1%. Jefferies analysts believe that the company's results in the third quarter were supported by a 5.1% increase in the average price of Ferrari cars.

Ma also reiterated its profit forecast - with revenue of at least €7.1 billion this year and around €9 billion by 2030.

The Italian manufacturer presented it for the first time on October 9 at the Investor Day. At the same time, the company announced new targets for adjusted earnings (EBITDA and EBIT) through 2030. And RBC Capital Market reckoned that the new targets imply average annual growth of 6% versus 10% in the three-year old plan.

All this led to the collapse of the company's quotations - the most serious one since it went public in 2016. They collapsed by 15.4% in Milan and by about the same amount in New York. Trading in Milan had to be suspended. Citi analysts noted that the company's forecast is below even the bank's pessimistic scenario and noted the "caution" of Ferrari's management.

Investment banks are generally positive on Ferrari. According to LSEG, out of 13 analysts following its activity, eight recommend "buy" its securities, four recommend "hold" and one recommends "sell". The average target price is $476.8, implying a potential upside of 15.4% to the Nov. 7 close. And UBS after the release of the report for the third quarter even raised the target price of Ferrari to $554 and maintained a "buy" recommendation, which means a potential upside of more than 36%. At the same time on October 16 the bank lowered the target from $579 to $529.

But investors are still wary of the company. The company's shares still have not recovered from the fall: on Friday, November 7, at the close of their price on the platforms in Milan and New York was about 16% lower than before the collapse. Investors are concerned, among other things, about the issue of lower growth rates of Ferrari's profits in the future. Are these concerns justified?

To answer this question, we need to understand the nature of Ferrari's business.

The company is known for its exclusive luxury cars. The company carefully maintains this image: it creates artificial scarcity and tries to sell cars to regular customers. According to the data for 2024, 81% of customers already own cars of this Mark, and almost half of them have several cars.

Ferrari stays true to the principle of its founder Enzo Ferrari - "to sell one less car than the market demands". At the same time, it raises prices without fear. For example, the new 12-cylinder supercar Ferrari 12 Cilindri costs 30% more than its predecessor 812 Superfast. In October 2024, the company presented the flagship F80 at a price of €3.6 million. Its marketing and commercial director Enrico Galliera said that Ferrari will produce only 799 copies of this model, and each is already assigned to a specific customer.

"Ferrari is less like a carmaker and more like Hermès," notes The Economist.

Ma delivers less than 14,000 cars a year to customers(13,752 in 2024), but its market capitalization exceeds $70 billion in New York, more than double that of Stellantis, which sells 5.7 million cars annually. Since Ferrari's separation from Fiat Chrysler in 2015, the Italian manufacturer's sales have more than doubled. And its operating profit margin is 28.3% through 2024, compared to single digits for mass automakers, The Economist writes.

Ferrari has significantly rejuvenated its customer base in recent times. In March 2025, the head of the company Benedetto Vigna told CNBC that now 40% of new customers are under 40 years old. A year and a half earlier, they made up about a third.

At the time, he said potential buyers were urging the company to speed up production. Now customers are spending about two years waiting for a new sports car. But it won't be doing that.

By the way, Vigna has only been in the automotive industry for four years. He took over as head of Ferrari in September 2021, and came from the IT sector. He headed the motion sensor division at STMicroelectronics and is known as one of the creators of the technology of automatic image flip on the screen. It was first used on the iPhone 4.

Another area of Ferrari's development is personalization. It earns a significant part of its money - about 20% of its revenue from sales of cars and spare parts - thanks to customization of cars to meet customer requests. For example, when a buyer chooses an exclusive body color, unique interior details, and so on.

However, the over-individualization of supercars is a concern for the company: Vigna said Ferrari is considering limiting color combinations to keep the cars liquid at resale. While competitors like Jaguar Land Rover are investing 65 million pounds to expand their paint capacity (so customers can paint their cars the color of their private jet or yacht, Fortune magazine adds), Ferrari is moving in the opposite direction.

Next year Ferrari plans to introduce its first all-electric car - Elettrica. But at the same time, the company has decided to revise its strategy until 2030 regarding the production of electric cars and reduce their share in the future model range to 20% from 40%.

What is the rationale behind this? Many fans of gasoline-powered supercars don't see the point of an "electric" Ferrari.

"There's no pleasure in an electric motor compared to a roaring V12 or V8 with their great sound," Graham Royle, an entrepreneur and owner of several Ferrari's as well as Lamborghini and McLaren, tells the Financial Times.

Benedetto Vigna says he's not going to convert customers to electric cars, but believes he can attract a new audience through the technologies that make an electric Ferrari special.

The FT notes that Ferrari has not yet revealed the price of the Elettrica model. But the market is already watching to see if the company can maintain high profitability with the release of electric cars. Perhaps the model will have a higher production volume and a lower price. But this approach contradicts Ferrari's signature strategy of creating supply shortages and price premium.

Independent supercar and luxury brand analyst Scott Sherwood said he wouldn't be surprised if only about 10% of Ferrari's models are electric by 2030, as it has always focused on customer preference. That means the company will be able to offset declining profits due to electric cars with high-margin sales of gasoline-powered supercars, as well as maintain its "scarcity" model.

UBS believes that Ferrari has so far managed to avoid the mistakes of other luxury brands, which tried to raise prices too aggressively and increase production volumes. The bank believes that Elettrica's exit is an important step for the company, as it should attract environmentally-oriented customers. In the US, UBS believes that the topic of sustainability and climate impact is much more important to affluent buyers than in Europe, for example. This is the basis for a successful sales launch of the model in the States.

The main idea of the analytical team of RBC Capital Markets is that the management of Ferrari gives too conservative forecast on long-term profit growth, and the market now has restrained expectations from the company. But analysts consider Ferrari one of the strongest companies among European automakers. They believe its profits will grow faster than management's forecasts - about 8% a year versus the stated 6%, thanks to the F80 and Elettrica models. The bank maintains an "outperform" rating in its Oct. 17 report with a €460 target price, up 30.7% from the Nov. 7 closing price.

JPMorgan maintained an "outperform" rating and $460 target price in its October 16 report. The upside potential is 11.3% from the November 7 closing price.

The bank emphasizes that Ferrari, even with limited growth in supply, is able to increase profitability by customizing cars and increasing their average price. For example, a panoramic roof for Ferrari Purosangue SUV costs about 13.4 thousand pounds ($17.6 thousand), and a special two-layer paint job - 22.5 thousand pounds ($29.5 thousand). According to the bank's analysts, Ferrari can increase production to 20-25 thousand cars a year without losing the exclusivity of the brand. The bank does not consider environmental regulations and the transition to electric traction as a threat to Ferrari.

This article was AI-translated and verified by a human editor