Ferrari’s stock took a rare double-digit hit after the October Capital Markets Day, where slower growth targets were unveiled. The new F80 supercar is expected to boost earnings. The company’s decision to maintain modest volume growth aims to protect its brand’s exclusivity and enhance long-term investment appeal. The stock price fell from above $500 to below $400, causing concern among investors. Despite the drop, Ferrari maintains strong margins and profitability in the auto industry. The company’s 2030 targets include 5% annualized revenue growth and an EBIT margin of at least 30%. Management committed to returning 7 billion euros to shareholders over the 2026-2030 period. Ferrari’s conservative approach to targets reflects its history of outperforming expectations. The company’s focus on limited production, high-margin supercars like the F80, contributes significantly to revenue growth and profitability. Ferrari’s emphasis on maintaining scarcity and brand value through slow volume growth is crucial for long-term shareholder value. Despite a premium valuation, Ferrari’s strong brand and historical performance make it a compelling investment opportunity. Management’s cautious growth targets are seen as a floor rather than a ceiling, providing potential for outperformance. The decision to halve the 2030 electric-vehicle target is viewed as a commitment to Ferrari’s core identity and brand integrity. The company’s strategy emphasizes mix, pricing, and brand activities for revenue growth, with volume playing a lesser role. Ferrari’s approach to maintaining exclusivity and residual values through modest growth aligns with its luxury brand status. The stock’s premium valuation reflects Ferrari’s iconic brand and long-term potential for growth. The Motley Fool Stock Advisor team did not include Ferrari in its top 10 stocks for investors, citing other opportunities with potential for significant returns. Stock Advisor has a track record of market-beating returns compared to the S&P 500. Daniel Sparks and his clients have positions in Ferrari and recommend the stock.

Read more at Yahoo Finance: Why I Bought the Dip in Ferrari Stock