In the first week of December, Ferrari stock (RACE) traded on a weak note and settled at $105.85 with a solid weekly loss of 1.5%. In November 2017, the company’s stock fell ~9.3% against the 2.8% gain seen in the S&P 500 Index (SPY) (SPX-INDEX).
Let’s take a look at the key technical support and resistance levels in Ferrari stock for the week.
Weekly technical outlook
During the week ended December 8, Ferrari (RACE) stock traded below its 50-day SMA (simple moving average) of $112.60, suggesting a bearish bias.
On the upside, a major horizontal resistance level in the stock lies near $112.80, close to its 50-day SMA. Its 14-day RSI (relative strength index) indicator stood at 37.50, showcasing the underlying weakness in its momentum. No major support level lies above $92.20.
On December 8, Ferrari stock maintained impressive year-to-date gains of 82.0% and turned negative after reporting its 3Q17 results on November 2.
The company reported 3Q17 earnings per share of 0.74 euros, or $0.86. This reflected an ~25.4% increase compared to its earnings in 3Q16. A favorable product mix and an increase in its global sales drove RACE’s profit margins higher in the third quarter.
In general, Ferrari’s profit margins are typically higher than those of legacy automakers (XLY) such as Fiat Chrysler (FCAU), General Motors (GM), and Ford (F). This trend is partly due to Ferrari’s production line of luxury cars, which yield better profit margins compared to the mass-market vehicles produced by mainstream automakers.
During its 3Q17 earnings event, Ferrari’s management revised its 2017 adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] guidance upward. Now, RACE expects its 2017 EBITDA to reach ~1.0 billion euros compared to its earlier guidance of ~950 million euros.
However, this upward revision was not able to meet investors’ high expectations, which could be the primary reason for its stock to turn negative.
Read on to the next part to learn how Harley-Davidson performed on Wall Street last week.