Luxury goods shares may have hit the skids in recent weeks on flagging demand in China and the cost of living crisis, but iconic Italian car maker Ferrari (RACE:NYSE) seems to go from strength to strength.

The shares hit new highs (2 February) after fourth-quarter sales topped analysts’ estimates and full year profit surged 34% to €1.25 billion. News that seven-time Formula 1 world champion Lewis Hamilton will join from Mercedes in 2025 on a multi-year contract also gave investor sentiment a boost.

The rally in the share price means Ferrari’s market value is closing in on €100 billion, making it more valuable than Mercedes-Benz (MBG:ETR), Porsche (PAH3:ETR) and Aston Martin Lagonda (AML) combined.

Looking ahead, chief executive Benedetto Vigna commented: ‘The record 2023 results, the ambitions that we have on 2024, together with the exceptional visibility on our order book allow us to look at the high-end of 2026 targets with stronger confidence.’

Ferrari’s long-term ambitions include delivering EBITDA (earnings before interest, tax, depreciation and amortisation) of €2.5 billion to €2.7 billion by 2026 representing a margin on sales of between 38% and 40%.

The company generated €932 million of free cash flow in 2023 and has earmarked around €800 million for distribution to shareholders via dividends and share buybacks.

Ferrari shares have been on a remarkable ride gaining 58% in the last year and nearly 200% over the last five years, comfortably outperforming German luxury peers Porsche and Mercedes-Benz.

Only electric vehicle maker Tesla (TSLA:NASDAQ) has managed to keep pace with its shares surging 787% over the last five years.

However, Tesla has moved into the slow lane of late with the shares earning the ignominious title of the worst performing stock in the S&P 500 over the last nine months.

The Elon Musk-steered company has been cutting prices to lure back customers and compete with rivals which has impacted margins. Tesla missed Wall Street’s earnings expectations (26 Jan) and warned growth in 2024 deliveries may be ‘notably’ lower than achieved in 2023.

Analysts have cut their earnings estimates with consensus now implying a small year-on-year decline.

Bad news seems to be mounting up for Tesla, with German newspaper Handelsblatt reporting this week software giant SAP (SAP:ETR) would no longer source fleet cars from Tesla due to late deliveries and price swings.

This follows a decision by rental car company Hertz Global Holdings (HTZ:NASDAQ) to slash the number of Tesla electric vehicles from its fleet. 

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