{"id":1156585,"date":"2025-10-17T11:04:17","date_gmt":"2025-10-17T08:04:17","guid":{"rendered":"https:\/\/www.etoro.com\/?p=1156585"},"modified":"2026-03-20T19:35:42","modified_gmt":"2026-03-20T17:35:42","slug":"deep-dive-can-ferrari-race-to-new-highs","status":"publish","type":"post","link":"https:\/\/www.etoro.com\/en-us\/news-and-analysis\/market-insights\/deep-dives\/deep-dive-can-ferrari-race-to-new-highs\/","title":{"rendered":"Deep Dive: Can Ferrari Race to New Highs?"},"content":{"rendered":"

The Daily Breakdown takes a deep dive into Ferrari, uncovering its margins, guidance out to 2030, and the valuation for RACE stock.<\/p>\n

Before we dive in, let\u2019s make sure you\u2019re set to receive The Daily Breakdown each morning. <\/span><\/i>To keep getting our daily insights<\/i><\/b>, all you need to do is <\/span><\/i>log in<\/span><\/i><\/a> to your eToro account.<\/span><\/i><\/p>\n

Deep Dive<\/b><\/h2>\n

Ferrari<\/a> is best known for its luxury supercars and Formula 1 legacy. While it\u2019s been building cars for more than 75 years, the stock \u2014 trading under the ticker symbol \u201cRACE\u201d \u2014 will mark its 10-year anniversary as a public company on October 21. Since its debut, shares have climbed more than 600%, easily outpacing the S&P 500\u2019s ~230% gain over the same period.<\/span><\/p>\n

Despite its long-term success, Ferrari hit a speed bump recently. From its October 2 high to its October 14 low, shares dropped over 25%. The decline followed its <\/span>Capital Markets Day<\/span><\/a>, where management issued new long-term guidance. The headline takeaway? Slower growth, but stronger profitability.<\/span><\/p>\n

Management now expects 2030 revenue of roughly \u20ac9 billion \u2014 below analysts\u2019 estimates and implying 5% annual growth versus the 9% forecast from its 2022 to 2026 plan. However, margins impressed: Ferrari anticipates EBITDA margins of at least 40% and EBIT margins of at least 30%, both above prior guidance. Further, industrial free cash flow is expected to nearly double to \u20ac8 billion between 2026 and 2030 (up from the \u20ac4.6 billion to \u20ac4.9 billion expected in 2022 to 2026).<\/span><\/p>\n

\"Ferrari's<\/p>\n

Above is a chart of the company\u2019s operating margin and free cash flow margin \u2014 the latter meaning how much of every dollar in revenue falls down to the company\u2019s free cash flow. Notice how strong of margins Ferrari generates (vs. the single-digit percentages we often see in the auto space).\u00a0<\/span><\/p>\n

The TLDR for investors:<\/b> Ferrari is steering toward slower sales growth, but higher profitability and cash flow.<\/span><\/p>\n

Want to receive these insights straight to your inbox?<\/strong><\/p>\n

Sign up here<\/a><\/p>\n

Diving Deeper \u2014 Valuation<\/b><\/h2>\n

When it comes to Ferrari, it may be difficult to differentiate the business from other low-margin automakers. Management carefully builds an order book \u2014 one that is now stretching into 2027, per management\u2019s remarks on the most recent conference call \u2014 and then focuses on execution and delivery.\u00a0<\/span><\/p>\n

We can see that steadiness in the chart below too, which highlights revenue (in orange) and the forward P\/E ratio (in blue).<\/span><\/p>\n

\"\"<\/p>\n

Notice two key points: first, Ferrari\u2019s revenue held steady through the pandemic-related logistical challenges of 2020 and continued climbing despite the 2022 bear market, which was marred by soaring inflation and rising interest rates. Second, notice how the valuation is approaching its lowest multiple since mid-2022, when the stock bottomed amid the broader market correction.<\/span><\/p>\n

Risks and the Bottom Line<\/b><\/h4>\n

Remember, because Ferrari has far better margins than other automakers, it\u2019s going to command a higher valuation. However, it still faces the risk of valuation compression, as the market may decide the stock no longer deserves as much of a premium given slower revenue growth expectations. Tariff-related headlines could also spook investors, while a global slowdown or pandemic-like shock would threaten demand and operations. Lastly, the stock is out of favor right now and it\u2019s not clear when that will change. Investors should take that into consideration when assessing this stock for their desired timeframe.\u00a0<\/span><\/p>\n

The Bottom Line:<\/b> Some investors may feel Ferrari is too exposed or too expensive to warrant a position. Others may feel that the recent ~26% correction was an overreaction and may find its valuation cheap when compared to the last several years.<\/span><\/p>\n

Disclaimer:<\/i><\/b><\/p>\n

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.<\/i><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

The Daily Breakdown takes a deep dive into Ferrari, uncovering its margins, guidance out to 2030, and the valuation for RACE stock. Before we dive in, let\u2019s make sure you\u2019re set to receive The Daily Breakdown each morning. To keep getting our daily insights, all you need to do is log in to your eToro…<\/p>\n","protected":false},"author":130,"featured_media":1245682,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[6819],"tags":[],"asset_type":[],"class_list":["post-1156585","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deep-dives"],"acf":[],"yoast_head":"The Daily Breakdown: Can Ferrari Race to New Highs?<\/title>\n<meta name=\"description\" content=\"The Daily Breakdown takes a deep dive into Ferrari, uncovering its margins, guidance out to 2030, and the valuation for RACE stock.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.etoro.com\/en-us\/wp-json\/wp\/v2\/posts\/1156585\" \/>\n<meta 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