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Why Ferrari Stock Tanked ~12% During the Q2 2018 Earnings Call

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Ferrari’s Q2 2018 earnings

Ferrari (RACE) released its second-quarter earnings results today. The company reported a 16.7% YoY (year-over-year) increase in its adjusted earnings to 0.84 euros or $0.98 per share RACE also beat Wall Street analysts’ consensus estimates of 0.80 euros.

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The rise in shipments and profits

Ferrari’s global shipments rose 5.6% to 2,463 car units from 2,332 in the second quarter of 2017. Despite a rise in shipments, revenue fell 1.6% YoY due to unfavorable currency movements, lower sales of the high-priced LaFerrari Aperta, and fewer engines supplied to Maserati.

Ferrari’s adjusted EBITDA improved by 7.0% YoY to 290 million euros or ~$338 million. Moreover, the company’s second-quarter EBITDA margin also expanded to 31.9% from 29.4% in the second quarter of 2017.

Investors’ reaction

Ferrari’s earnings beat kept investors’ optimism alive. The stock opened at $134.51, up 1.4% from the previous session’s closing price. However, these gains didn’t last long. During the earnings conference call, the stock tanked about 12% from the previous day’s closing price.

On the second-quarter earnings conference call, newly appointed CEO Louis Camilleri mentioned that the targets of former CEO Sergio Marchionne’s 2022 business plan “were aspirational.” This could be one of the key reasons for investors’ negative reaction on Wall Street.

Camilleri added, “We’ll cross the Ts and dot the i’s and tell you how we think we’ll get there.” Ferrari’s Capital Markets Day is scheduled for September 17 and 18. Investors await Camilleri’s views on Ferrari’s growth over the next five years.

Q2 earnings season

Later today, Tesla (TSLA) is set to release its second-quarter results. See Can Tesla’s Q2 2018 Earnings Help Its Stock Turn Positive? to find out what Wall Street analysts expect from Tesla’s second-quarter report. Other automakers (XLY) General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) already released their second-quarter results last week.

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