Despite high inflation, rising interest rates and generally weakened 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 development for two of Europe’s best-known brands.
Where the luxury conglomerate LVMH, which is behind, among other things, the clothing brand Fendi and the champagne Möet & Chandon, has risen over 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 luxury car manufacturer’s market value has risen to 53.9 billion euros and thus entered the Milan Stock Exchange’s three most valuable companies. The price lift has also meant that Ferrari is now valued at more than Stellantis NV – Fiat and Alfa Romeo’s parent company – which previously owned Ferrari.
Among the 14 members of the Stoxx 600 Auto & Parts index, none have risen more than Ferrari. The nearest challenger is BMW with an increase of just over 30 per cent.
Luxury and «Big Tech»
The fact that luxury goods still experience strong demand among wealthy customers has come to light in particular at the above-mentioned LVMH, which is controlled and managed by the billionaire Bernard Arnault. The price rise for the conglomerate has sent the Frenchman to the top of Bloomberg’s list of the world’s richest people, and at the start of 2023 the group was able to report record high revenues last year.
Ferrari has also benefited from the demand for exclusive brands. In the company’s first-quarter report, which was presented last week, it showed revenues of 1.42 billion euros, up from 1.18 billion euros in the same quarter last year. The profit before tax increased by almost one hundred million euros to 381 million euros.
During the first three months of the year, vehicle shipments increased to 3,567 units, an illustration of continued strong demand. Combined with the jump in both profit and revenue, one can draw the conclusion that Ferrari’s upward adjustment of prices has not had a negative impact on demand among customers, who largely consist of wealthy individuals.
– Ferrari has always been synonymous with luxury, which the company’s multiples confirm. The stock has outperformed the broad market so far this year, a trend comparable to other luxury players such as LVMH, says IG strategist Vincenzo Longo to Bloomberg.
The news agency also describes the luxury companies in Europe as what “Big Tech” is to the stock market in the USA. Namely, companies that manage to maintain growth even in downturns.
The largest shareholder in Ferrari is Exor NV, which is controlled by the prominent Agnelli family in Italy. The surname is also known to those interested in football. Andrea Agnelli was the chairman of the Turin club Juventus until the end of last year, a position he first took up 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 19th century.
Benedetto Vigna took over as CEO of Ferrari in 2021. He has gone out on the offensive and promised a transition to electric cars in the future. Pictured last summer. (Photo: Flavio Lo Scalzo/Reuters/NTB)
Porsche on the stock exchange
Another that has benefited from the strong demand for luxury cars is Volkswagen, which last autumn, after several months of speculation, finally took Porsche public at the end of September.
On the first day of trading, the Porsche share traded at 84 euros, valuing the company at around 75 billion euros.
The market value at the stock exchange debut was markedly below what had previously been suggested. When the news of a possible IPO of Porsche began to circulate early last spring, there was talk of a valuation of around NOK 870 billion, or up to 90 billion euros.
In a press release, the Frankfurt stock exchange nevertheless stated that the Porsche listing was the largest in Germany since 1996, when Telekom went public.
The Porsche share has risen over 37 percent on the stock exchange since the listing, and the share is now traded at 113.2 euros.
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2023-05-09 17:44:38
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