Here’s Why It Is High Time To Invest In Ferrari As Demand For Sports Cars Is On The Rise Despite Coronavirus - Financial Advisor Heroes (2024)

Big Bank Accounts By Ami Ciccone April 14, 2020

Although businesses all over the world are experiencing a downturn, the Italian luxury sports car maker Ferrari has shown resilience with its business flourishing like usual. Other car manufacturers are suffering, but for the case of Ferrari, it is quite evident that the company is proving itself to weather the wider slowdown in car manufacturing.

Business Is Booming

The market hit its historic low due to the pandemic, but Ferrari stocks have grown by 21% since March 23. The stock, which is currently being traded at a share price of $157, maximized its rate by just 13% starting April. Clearly, it has outpaced the benchmark index.

As for other car manufacturers, they’re not doing good because showrooms shut down and factories have also been closed due to the outbreak. Just in the United States, big car companies like General Motors and Ford have seen their rates go down by 43% and 36%, respectively, in 2020. By contrast, Ferrari has endured the plunge waybetter, as it only dropped less than 7% so far this year.

Ferrari Was Ready For The Crisis

As perJPMorgan analyst Ryan Brinkman, Ferrari’s good standing is partly due toits position as a luxury goods business with the capital strength of an automaker. It’s the most popular brand in the history of Formula 1 racing, which adds to thereverencein which the brand is perceived.

Before the COVID-19 plunge, Ferrari seems to have already been in a good position thanksto significantrevenuegrowth through the years because of more earnings from heightened sports car deals and a steady flow of wealthy patrons.

But although the demand for the vehicle is still rising, the supply is at its historic low. So much so that it’s making the price of its stocks soar higher than ever. The company sells its products before production, which means that the sold orders are yet to be made.

Demand Far Outstrips Supply

The company claimed that the demand for their cars is rising day by day, and so far, there are no cancellations of orders despite the coronavirus. Although the market is unpredictable and extremely volatile, it can be said that the stocks will offer a valuable return after the stock market opens.

AsEurope and the United States goes into lockdown because of coronavirus, Ferrari could encounter some possible stock chain issues for April and the majority of May, which could potentially affect their shipments,as per Banca IMI.