Why I Bought the Dip in Ferrari Stock

Core Viewpoint - Ferrari's stock experienced a significant decline following the October Capital Markets Day, dropping from above $500 to below $400, primarily due to new 2030 targets indicating slower growth than expected [1]. Group 1: Financial Guidance - Ferrari raised its 2025 guidance to at least 7.1 billion euros, with a long-term target of approximately 9 billion euros in net revenue by 2030, reflecting about 5% annualized revenue growth [4]. - The company expects earnings before interest (EBIT) to reach at least 2.75 billion euros by 2030, implying around 6% annual growth and an EBIT margin of at least 30% [4]. - Management plans to generate at least 3.6 billion euros of EBITDA and about 8 billion euros of industrial free cash flow from 2026 to 2030, with a commitment to return roughly 7 billion euros to shareholders through dividends and buybacks [5]. Group 2: Market Reaction and Performance - The stock's double-digit drop was triggered by investors' focus on slower growth targets, despite the company maintaining some of the best margins in the auto industry, with high-30s adjusted EBITDA margins and high-20s adjusted operating margins [2][6]. - The introduction of the new F80 supercar is expected to provide significant earnings support in the upcoming year [6]. Group 3: Management Strategy - Ferrari's conservative long-term targets may be viewed as a cautious approach, as the company has a history of outperforming its targets, being on track to exceed many of its 2026 profitability goals a year early [7].