Despite high inflation, high interest rates and generally weak purchasing power, luxury goods do not seem to have been significantly affected so far this year. In any case, not if you look at the price evolution of two of the most popular brands in Europe.
Where luxury conglomerate LVMH, which is behind clothing brand Fendi and champagne Möet & Chandon, is up more than 20 percent so far this year, Ferrari has also gained a feather in its cap as we approach the halfway point of 2023.
With an increase of 34 percent so far this year, the market capitalization of the luxury automaker has risen to 53.9 billion euros, thus entering the top three companies on the Milan Stock Exchange. The price hike also means Ferrari is now worth more than Stellantis NV – the parent company of Fiat and Alfa Romeo – which previously owned Ferrari.
Of the 14 members of the Stoxx 600 Automotive & Parts Index, none has risen more than Ferrari. The closest competitor is BMW, up just over 30 percent.
Luxury and “big technology”
The fact that luxury goods are still in strong demand among wealthy clients has come to light, especially at the aforementioned LVMH, which is run by billionaire Bernard Arnault. The conglomerate’s rise in prices made the Frenchman top Bloomberg’s list of the world’s richest people, and at the beginning of 2023, the group was able to record record high returns last year.
Ferrari has also benefited from the demand for exclusive brands. In the company’s first-quarter report, submitted last week, it showed revenue of 1.42 billion euros, up from 1.18 billion euros in the same quarter last year. Profit before tax increased by nearly 100 million euros to 381 million euros.
During the first three months of the year, vehicle shipments increased to 3,567 units, showing continued strong demand. Combined with the jump in both profits and revenues, one can conclude that Ferrari’s price adjustment upward did not have a negative impact on demand among customers, who are largely made up of wealthy individuals.
– Ferrari has always been synonymous with luxury, which the company’s multiplier confirms. The stock has outperformed the broad market so far this year, a trend comparable to other big players such as LVMH, IG strategist Vincenzo Longo tells WebMD. bloomberg.
The news agency also describes luxury companies in Europe as “Big Tech” in relation to the US stock market. They are companies that have managed to sustain growth even in recessions.
Ferrari’s largest shareholder is Exor NV, which is controlled by the prominent Agnelli family in Italy. The nickname is also known to those interested in football. Andrea Agnelli was president of Juventus in Turin until the end of last year, a position he first held in 2010. He was one of those who advocated the creation of the controversial Superliga, which met a quick death in the spring of 2021 .
It was Giovanni Agnelli who founded Fiat at the end of the nineteenth century.
Benedetto Vigna took over as CEO of Ferrari in 2021. He’s come out on attack and promised to move to electric cars in the future. Pictured last summer. (Photo: Flavio Lo Scalzo/Reuters/NTB)
Porsche on the stock exchange
Another company that has benefited from strong demand for luxury cars is Volkswagen, which last fall, after several months of speculation, introduced Porsche to the public at the end of September.
On the first day of trading, Porsche shares traded at 84 euros, valuing the company at around 75 billion euros.
The market capitalization on the stock exchange for the first time was significantly lower than previously suggested. When news of a potential Porsche IPO began circulating early last spring, there was talk of a valuation of around NOK 870 billion, or up to €90 billion.
In a press release, the Frankfurt Stock Exchange stated however that Porsche’s listing was the largest in Germany since 1996, when Telekom went public.
Porsche shares have risen more than 37 percent on the stock exchange since listing, and the stock is now trading at 113.2 euros.
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