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The car maker unites autos and luxury in a way that makes rivals feel downmarket, while its exposure to China’s faltering economy is more limited.

Ferrari is synonymous with the “rosso corsa” red on its supercars—and right now, investors in Ferrari are seeing red as well. But after a recent decline, the stock may be getting ready to rally again.

At first glance, shares of the Italian auto maker, which are up nearly 28% in 2024, have done just fine, especially compared with other luxury goods and high-end car makers. LVMH Moët Hennessy Louis Vuitton and Gucci owner Kering have fallen 21% and 45%, respectively, while Mercedes-Benz Group has declined 21%, as weak consumer spending in China drags on their sales.

But with Ferrari down 13% since the end of August, it’s fair to wonder if similar troubles have caught up with the company. Investors needn’t worry—Ferrari still trumps furs and fragrances. With its million-dollar cars, it unites autos and luxury in a way that makes others feel downmarket, while its exposure to China’s faltering economy is more limited. What’s more, the Maranello-based company’s latest car, the $3.8 million F80, is set to deliver a significant earnings boost that could help Ferrari shares gain 30% from here.

Ferrari’s success begins with where it sells cars. China, Taiwan, and Hong Kong accounted for just 8% of Ferrari shipments over the first nine months of 2024—for Mercedes, it was 35%. That means that even though Ferrari’s China shipments are down 22% this year, single-digit growth in other regions has led to earnings growth.

There are reasons for the underexposure. Ferrari feels that would-be buyers in China still need “more time to know and get acquainted with our brand,” chief marketing and commercial officer Enrico Galliera tells Barron’s. He adds that it was hard to compare China with other markets, given its high level of taxation on luxury goods. Beijing introduced a 10% levy on supercars in 2016, and in October its ministry of commerce said it was considering hiking tariffs on some imported vehicles.

It’s worth noting that the 85-year-old company entered China in 1992. LVMH opened its first boutique in Beijing the same year—and the region containing China has become the French conglomerate’s biggest market, making up more than 30% of its revenue.

But Maranello has always been careful not to flood the zone with its wares. Founder Enzo Ferrari often pledged to “always deliver one car less than the market demands,” reflecting the tight control on shipments that has helped maintain the brand’s cachet. “What we do in China is more or less the same as other markets. We never want a huge influx of cars if demand just isn’t there,” says Galliera.

Granted, there’s a chance the blessing of low exposure to China turns into a curse. Beijing has unveiled numerous stimulus measures in a bid to boost growth, and there could be more to come. If that causes China’s economy to blow hot again, Ferrari’s lack of presence there could leave it trailing its peers.

Valuation could be another speed bump. The stock fetches 48 times future earnings—higher than its beaten-down rivals, although that figure was as high as 51.5 in October. Shares dropped in November despite a third-quarter earnings beat: Investors are so used to outperformance they were expecting a year-end guidance hike. The stock now trades at the valuation it had back in February.

But a once-in-a-generation new model means dips like that are a buying opportunity. Ferrari unveiled the F80 in October. It should help shares to keep lapping the field even if Chinese consumer spending rebounds.

The F80 is hardly a humble station wagon. It has a top speed of nearly 220 miles an hour and goes from zero to 125 miles per hour in under six seconds. Its engine runs off tech used in Formula One.

It should appeal to investors as well as car fanatics. Ferrari has already filled its order book for all 799 F80 cars and is set to start shipping them late next year, when sales of the near-$4 million model will start showing up in earnings reports. Analysts expect earnings per share to grow 10% to 8.89 euros ($9.34) in 2025.

Just how big the boost is depends on the F80’s margin, which Galliera says would be “top of the offering” among Ferrari’s cars.

Wall Street is bullish, too. Anthony Dick, who covers the automotive sector for the Paris-based private bank and asset manager ODDO BHF, tells Barron’s that margins on the F80 are likely to be so high that it could account for 2% of units sold but 20% of all profit.

Red-hot demand for the supercar shows Ferrari’s “best-in-class pricing power,” speaks to the brand’s cachet and loyal customer base, and signals it will carry on dodging the slowdown plaguing other car and luxury-goods makers, he says. Since the F80’s unveiling, Dick, who rates the stock a Buy, has raised his price target on the Italy-listed shares to €475 from €445, implying it could climb 15% from current levels.

He’s not alone. Half the analysts covering the stock rate it a Buy, and just 8% have it at Sell despite this year’s rally. Some have even loftier price targets—the Street’s biggest bull, Evercore ISI’s Michael Binetti, argues that Ferrari’s U.S.-listed shares could jump 30% to $565 thanks to the F80.

At nearly $4 million, owning the supercar might be a pipe dream. Buying Ferrari stock could be the next best thing.

Skateboard and artisanal glassware take pride of place in Andelman’s selection available until Dec. 20 at the auction house’s Paris flagship.

HANDLE WITH CARE: Most people would balk at having skateboards and handcrafted stemware in the same room.

But that’s exactly why Sarah Andelman wanted to put the two categories together in “Attention, Fragile!,” the holiday retail pop-up that she curated on the first floor of Sotheby’s new Paris headquarters.

“Any movement or momentum and something can be broken, that’s what made me think of putting them together,” the brand consultant told WWD during a walkthrough of the space, which opened Thursday.

Running until Dec. 20, it offers works of art, glassware, collectible skateboard decks and a selection of holiday-minded gourmet treats, alongside a sampling of the auction house’s fixed-price luxury goods from the likes of Hermès, Rolex and Chanel.

Sotheby’s wanted to kick off its retail offer in Paris with a metaphorical bang – and who better for the task than Andelman, previously the purchasing and image director of cult concept store Colette, said Marie-Anne Ginoux, managing director of Sotheby’s Paris.

Auction houses are “a world of their own,” one she hadn’t explored in depth before curating an auction for Pharrell Williams’ Joopiter platform, Andelman said. It’s their pandemic-driven evolution that particularly stood out to her.

“What struck me when I went on Sotheby’s ‘buy now’ section is that you had the same products you’d find on StockX, like sneakers and skateboards,” she continued. “I felt they were talking to two completely different markets.”

When Sotheby’s came calling, it felt apt to offset the traditional image of auction houses as purveyors of major art and classic luxury items with skateboard culture.

Plus, “[Sotheby’s] reminds me a bit of Colette…in the way it transforms non-stop,” Andelman said.

On the walls are a multitude of skateboard decks, including a trio featuring the work of John Baldessari and a Pantone-themed series of five imagined by Ryan McGuinness and produced by Supreme in 2000.

Carefully arrayed on transport crates are glasses by New York-based designer Jonathan Hansen, who has collaborated with the likes of Thom Browne and Ralph Rucci; Maison Balzac, a 12-year-old label founded in Australia by French-born Elise Pioch Balzac, an Hermès alum turned buyer turned tableware maker; and French designer Sam Barron, who teamed up with Italian master glassmaker Massimo Lunardon for “French Kiss,” a series of 30 unique glasses imagined for this pop-up.

In the salon usually dedicated to retail appointments, Andelman set an installation and selection of goodies from Thai artist PZ Opassuksatit – with a pair of Picassos on the wall.

While the overarching idea is “bringing together crushes,” Andelman said she was also keen to offer products that can’t be found elsewhere in Paris, and keep a broad-ranging mix of expensive and more affordable items.

Alongside decks and artwork that could set you back five figures are “Skateboard Culture,” a newly released book written by skateboarding insider Morgan Bouvant and journalist Sébastien Carayol; a selection of treats such as sweets from Palomas, a Lyon-based chocolatier that’s all the rage among the Paris fashion set; and prize-winning olive oil from La Cavalerie, an estate in Provence that belongs to Cosima Ungaro, the daughter of the late Emanuel Ungaro.

Ahead of the holiday season, she also curated a selection of gifts that range from Just An Idea books to necklaces by Berlin-based jewelry label Avgvst; ceramic objects depicting stationery by French label En Vrac, and a golden waffle by Belgian fashion designer Jean-Paul Lespagnard.

There will also be a series of events throughout the pop-up, including a olive oil and chocolate tasting on Nov. 30 and a skateboard-themed book signing with Raphael Zarka, Fred Mortagne and skateboarder Ed Templeton on Dec. 8.

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