I think the big problem is that a lot of Ferrari's early investors are just now starting to figure out the business. And what they're learning is a disappointment.
Why Ferrari might be a disappointment for many investors
There was some good news in Ferrari's presentation of its 2015 earnings on February 2: Shipments were up 6% and net income was up 9.4%.
Nothing too bad there. But the problem seems to be the guidance that Ferrari gave for 2016 . It expects shipments to grow just 3.3%, just a tiny increase in adjusted pre-tax earnings, and barely a dent in the big debt load it took on when it separated from Fiat Chrysler Automobiles .
To some extent, the blah-looking outlook is a reflection of global economic realities: China's once-hot luxury market is slowing. But a lot of it is just simply the fact that that's the way Ferrari is.
Ferrari isn't a company aggressively searching for growth. On the contrary: The company limits its own production to preserve the brand's exclusivity and pricing power. Ferrari sold just 7,664 cars in 2015. CEO Sergio Marchionne said on February 2 that it might raise production to about 9,000 a year -- by 2019.
But it's unlikely to ever go much higher. And that's the conundrum facing Ferrari investors: Where's the growth going to come from?
Ferrari's not a growth stock, and investors have turned away
It's true that economic factors are probably weighing on the stock's price to some extent right now. Ferrari's sales fell slightly (1%) in the fourth quarter, and its net income fell 30% year over year.
Sales of Ferrari's V12-powered F12 Berlinetta slowed in 2015. Image source: Ferrari
Some of that was due to where Ferrari is in its model cycle. Its lower-profit V8 cars are new and selling well, while its higher-profit V12 models are several years old and sales have fallen off. None of that is bad, and it'll shift when the next generation of V12-powered models are introduced.
(It's probably also worth mentioning that the 2014 comparisons include some sales of the hyper-expensive (and almost certainly hyper-profitable) La Ferrari supercar. The La Ferrari was a limited edition of just 499 cars, each priced at over $1 million.)
But I think a lot of the reason for Ferrari's share-price decline is simply this: All of the investors in Ferrari's stock were new to the company, and some of them didn't like what they learned from the fourth-quarter call: that Ferrari isn't ever going to be a company with a big growth story. And so they sold.
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The article What Investors are Still Struggling to Understand About Ferrari originally appeared on Fool.com.
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