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The name Ferrari and the iconic black prancing horse on a yellow background have become synonymous with luxury and wealth, as well as the definitive symbol of Italian excellence in technology, innovation, performance and pleasure. Headquartered in Maranello, Italy, Ferrari is involved in the designing, manufacturing and sale of luxury and high-performance cars. The company also offers a wide range of associated products such as branded apparel and accessories, dedicated maintenance services, financial services and warranty programs. Additionally, Ferrari also operates its own Formula 1 racing team, Scuderia Ferrari. Ferrari products are marketed worldwide, but the company is all about exclusivity. The company is special because their products are rare, and pretty pricey as well. Ferrari is now the epitome of beauty, style and status, but its journey to the top was not particularly smooth and obvious.
The company was founded by Enzo Ferrari, a car racing enthusiast, on the 20th of September 1939 as Auto Avio Costruzioni and it produced its first racing car just a year later. It was not until 1947 that the first Ferrari-badged car, the 125 S, was produced. Ferrari has since then produced a couple of iconic models, but it is the 1960s Ferrari 250 GTO that takes the title of the most exclusive car, having sold for over $38 million at a 2014 auction. Only 39 were ever produced. The 1960s brought mixed fortunes to Ferrari. The company was subject to a failed controversial acquisition by Ford, but it was Fiat that managed to buy a 50% stake in Ferrari in 1969. Fiat then increased its stake in Ferrari to 90% following the death of Enzo in 1988.
Fiat undertook numerous technological and innovative feats that saw Ferrari introduce superior quality and performance cars. The company enjoyed great brand appreciation as well as sporting success on the tracks in the late 1990s and throughout the turn of the millennium. On the 15th of October 2015, Ferrari went public, listing on the New York Stock Exchange (NYSE), where it trades under the ticker symbol RACE. The stock falls in the Consumer Cyclicals sector, under the Automobiles category. Ferrari also cross-listed on Borsa Italiana (Italian Stock Exchange) on the 4th of January 2016.
Ferrari Stock History
Consumer Cyclicals stocks are always considered volatile stocks because they mirror the prevailing economic conditions and business cycles, but Ferrari stock is as special as its products. The stock was priced at $52 in its initial public offering, effectively valuing the company at $9 billion. As anyone would have imagined, the stock was a literal media buzz and was heavily oversubscribed, with investors, fans and enthusiasts all keen to have a slice of Ferrari’s success. Nonetheless, the stock had a less stellar start to ‘public life’, tanking over 40% to print its all-time low at just below €30 by February 2016 (just 4 months after the IPO). However, by February 2017, the stock had already doubled to €60, and its speed was just getting started!
By November 2017, the stock had taken out the psychological €100 price barrier and it managed to print a temporary high of just above €127 by June 2018. The subsequent retracement of the multi-year rally pulled the stock to just below €90 by December 2018. The stock then resumed its uptrend and managed to print an all-time high of just above €165 in February 2020, just amid a year that global stocks were being pressured lower due to the economic effects of the coronavirus pandemic.
How to Trade Ferrari Stock
Just like its cars, Ferrari stock generates much enthusiasm among investors. Here are some of the factors that drive the Ferrari stock:
- Legislative Issues
Many jurisdictions around the world are enacting tough legislation regarding the issue of CO2 emissions. This does not sit well with Ferrari, whose high-performance cars cannot easily keep up with such legislation.
- Competitor Performance
Ferrari faces tough competition from well-regarded supercar manufacturers such as Lamborghini and Porsche. The competitors do not follow the low production model that Ferrari pursues, which means that they continually gain more market share and may shift potential Ferrari customers to their brands.
- New Product Rollout
New product rollouts are big events in the automotive world, and particularly so in the supercar category where fans and enthusiasts track and analyse various specifications and components in detail. While Ferrari boasts a sticky and emotional consumer base, if the competition edges ahead in terms of technology and car performance, they may manage to eat into a portion of Ferrari’s famed waiting list.
- Raw Materials Price Dynamics
Ferrari uses a wide range of raw materials from aluminium, steel and carbon fibre to premium leather, wood and a slew of other high-quality components to make cars worth their high price. All the materials are sourced from different parts of the world, exposing Ferrari to cost and supply uncertainty, which may consequently impact profitability.
- Periodic Earnings Reports
Ferrari’s fiscal year runs from January to December, and the company releases quarterly and semi-annual earnings reports to ensure that shareholders are kept updated on the current and future health of its business. In these reports, Ferrari outlines its profits, costs, risks, pending orders, research and development costs, as well as other relevant variables that help investors to make quality assessments of its potential future stock price direction.
Why Trade Ferrari stock CFDs on AvaTrade MT5
Ferrari stock is available for trading on the AvaTrade MT5 platform as a CFD. Here is why you should consider trading Ferrari stocks with us:
- International Regulation
AvaTrade is regulated in various jurisdictions around the world. This marks us out as a reliable and trustworthy brokerage company, where investors are guaranteed safety and security as well as transparent trading services at all times.
- Leverage Trading
AvaTrade offers leverage of up to on Ferrari stock, which means that investors can increase their market exposure to even bigger potential when trading on our platform. But remember that leverage is a double-edged sword, so that the potential losses are magnified just as potential profits.
- Go Long or Go Short
When trading CFDs, you do not own the underlying asset but instead, you speculate on its price changes. This means that investors can effectively trade whether the Ferrari stock price is rising or falling.
- Some of the Best Trading Conditions
AvaTrade offers great conditions for trading Ferrari stock – no trading fees besides the bid-ask spread, transparent prices and fast and reliable execution.
- Wealth of Trading Resources
AvaTrade has numerous handy resources that can help investors get the most out of their trading activities. For instance, the AvaProtect feature can help you limit losses and protect profits when trading Ferrari stock. On top of this, you will get access to Trading Central, AvaSocial and Guardian Angel add-ons to maximise your trading potential.
Ferrari Stock FAQ
- Why should I trade Ferrari shares?
Ferrari is not a car for the masses, and while you might never own or drive one of their cars, you can still own some Ferrari stock. Maybe you can even make a profit on it. Since its IPO in 2015 the stock has been on a nearly constant uptrend too, making it pretty easy to know what direction you should take on your trades. It’s this predictability that really makes Ferrari a stock you will want to trade. While other stocks are moving sideways, you can nearly always be sure that Ferrari is trending higher, or preparing to resume its trend higher. At least that’s been the case since the IPO for the stock.
- Is Ferrari the best automotive stock for trading?
With so many automotive stocks to choose from, and many of them showing good chart patterns for trading, Ferrari may not be the best automotive stock for trading. It is a good choice however, thanks to the predictability that’s been built into the stock since its IPO. Investors like Ferrari, and the company has been able to continue delivering good growth, which has led to trending behaviour in the stock that has seen it rising for most of the time since its 2015 debut. Obviously, that won’t always be the case, but until there is some sign that the uptrend has ended Ferrari is a fairly easy trade.
- What’s the best strategy for trading Ferrari shares?
As we’ve already mentioned, Ferrari shares like to trend, and that trend has primarily been higher since the debut of the stock in 2015. That means traders should use a trend following strategy when trading the stock. Note that it isn’t immune to the occasional weak period, so caution is also needed. You can’t blindly buy the stock in the belief it always rises, but if you see a trend higher that’s certainly a good time to contemplate a long position. Another strategy for trading Ferrari is to wait for the pullbacks that come, and trade as the stock bounces and begins to head higher.
Race ahead with Ferrari stock on the AvaTrade platform!
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