Investing in Supercar Companies – What to Expect
Savvy investors all over the world are on the constant hunt for the best investing opportunities. Investing in supercar companies is a heady combination of glamour and exponential risks that few investors can resist. A couple of decades ago, only the elite and the ultra-rich had access to such luxurious names as Ferrari and Porsche.
But these days, the supercar investment club is a diverse mix of those with high to moderate budgets. Nevertheless, similar to any investment plan, understanding the basics and nitty-gritty about a company’s finances is crucial. This post gives you a low down on the top three supercar companies to invest in – Ferrari, Aston Martin, and Porsche.
Later on in the post, we take a look at McLaren and Lamborghini and their possible IPO.
Ferrari or Ferrari S.p.A, is a manufacturer of luxury sports car from Italy. The company was originally a part of the Alfa Romeo race division until founder Enzo Ferrari took over as a separate company in 1939. However,
the first official Ferrari car hit the market only in 1947. The supercar company has its headquarters in Italy and trades as RACE at New York State exchange, NYSE, and Italian Bourse, BIT.
As recent as 2014, FCA or Fiat Chrysler Automobiles owned 90% of shares in Ferrari. However, a spin-off took place in 2015, which gave birth to Ferrari N.V, the holding company of Ferrari S.p.A. group. Furthermore, this separation is also partly why 10% of Ferrari shares went up in IPO with a listing in NYSE.
The company is world-famous for racecars, particularly in Formula 1. However, Ferrari also has a good selection of road cars, albeit expensive and luxurious. In addition, the supercar company is also into producing concept cars, bio-fuel, and hybrid cars. The company has 4,164 employees as of 2019.
The net worth of Ferrari is $36.41B as of March 23, 2021.
Financial breakdown of Ferrari
Investors who want to look underneath the gleaming metal of Ferrari cars need to have a piece of good knowledge about their financial status.
Note: The figures in this post are from the 2020 Annual Report from Ferrari NV published on February 26, 2021. All financial information is presented in $ USD.
Revenue – Ferrari’s annual revenue in 2020 was $3.952B, which was about a 6% decrease from 2019. However, for the quarter ending December 31, 2020, the company’s revenue stood at $1.257B, which is an impressive 22.35% increase year-over-year.
Gross profit – The gross profit for Ferrari for the quarter ending December 31, 2020, was $0.655B, which is an increase of 20.69% year over year.
Profit margin – The net profit margin of Ferrari is 17.8% as of December 31, 2020.
Operating income – $0.290B, which is an increase of 19.29%, year over year.
Adjusted EBITDA – $3.7M
Market cap of Ferrari
Historically, the market cap of Ferrari has always been outstanding. As of March 26, 2021, Ferrari’s market cap is $37.74B, which puts it comfortably among the elite large-cap companies.
Over the last five years, shares of Ferrari rose by about 433%, which is a staggering return on investment. This instance of gaining impressive gains is one of the primary reasons that attract long-term investors to credible companies such as Ferrari.
In addition, the EPS or earnings per share for Ferrari are about 11% per year. For some, this percentage is less than stellar when you compare to the 40% of a standard average increase of share price. However, the compound earnings per share and the high PE ratio of nearly 63% are a clear indication that investors hold Ferrari in very high regard when investing.
Apart from the investors’ confidence, Ferrari also projects impressive growth results in the current fiscal year. Take a look at the 2021 outlook presented by the company:
Projected revenue – $5B
Adjusted EBITDA – $1.7B, which is a growth rate of 33.7% to 34.9%.
Industrial Free Cash Flow – $0.41B
Of course, this is assuming that trading conditions are not affected by unprecedented conditions such as the Covid-19 pandemic of 2020.
If you look at TSR or the total shareholder return over the last 12 months, it stands at 24%, which is not very promising. However, if you consider the long-term benefits, Ferrari’s share price is about 41% annually, which is very good.
Future of Ferrari
According to the officials at Ferrari, the supercar company plans to expand its catalog by adding as many as 15 new car models by 2022. Two of the supercar models were scheduled to be on the road by 2020. However, the plan was blown out of the water by the coronavirus.
In addition, Ferrari also has plans to enter the SUV market very soon. The first Ferrari SUV is supposed to be named Purosangue and is scheduled for an international debut in 2023. Experts in the auto industry predict that the Purosangue will be a stiff competitor for rivals, including the Aston Martin DBX and the Lamborghini Urus.
Furthermore, the supercar company has also revealed that they are working on a new engine for the 2021 F1 season. Head of the Formula 1 division, Mattia Binotto, says that the new engine has very promising results. The team also revealed their plan to change the company’s F1 car’s name from SF1000 to SF21 for the current race season.
So apart from its steady performance in the share market, Ferrari shows no sign of slowing down, which is always a great confidence booster for investors and shareholders.
Aston Martin Lagonda Global Holdings plc, or simply, Aston Martin, has long been an icon of British luxury in the automobile industry. Its association with the glamorous James Bond also works like a charm for its popularity. The luxury sports car founders are Lionel Martin and Robert Bamford, and it was founded in the year 1913.
Aston Martin has its headquarters in Warwickshire, UK. However, they serve a worldwide clientele. As of 2021, Aston Martin has 1997 employees worldwide. The company trades as AML at the London Stock Exchange.
This independent luxury car manufacturer has a Royal Warrant as well as the Queen’s Award for Enterprise. In terms of honor and prestige, few supercar companies can measure up to Aston Martin. But ironically, Aston Martin has filed for bankruptcy seven times since its inception.
Financial breakdown of Aston Martin.
Note: The financial figures of Aston Martin in this post are from the investors’ annual report 2020. All financial information is in $M
Revenue – $843.7
Gross profit – $153.2
Profit margin – 18.2%
Operating income – $477.4
Adjusted EBITDA – $96.67
Market cap of Aston Martin.
As of March 2021, the market cap of Aston Martin stands at $3.04B.
Growth of Aston Martin in the last five years.
Despite running into financial woes multiple times in its history, Aston Martin has managed to stay afloat and even perform well in terms of growth. This is largely due to the fact that the billionaire Lawrence Stroll acquired about 25% of its shares in the supercar company.
According to some reports, Stroll invested about $600 million into Aston Martin at the time of his association with the company. But apart from this fantastic turn of fortune, the company also raised its short-term working capital to $104 million.
In terms of growth, Aston Martin’s sales performance was far from spectacular in 2020 due to the covid-19 pandemic. However, at the turn of Q4, the overall performance improved drastically due to the DBX SUV sale’s resurgence. This is a fantastic piece of news for shareholders and investors alike.
Future of Aston Martin
Along with Lawrence Stroll’s input and his billions, Aston Martin has impressive plans for the future. The supercar company plans to roll out electric cars as early as 2025. According to the company’s chairman, plans to drop an SUV and a sports car with electric power are also in the pipeline.
In addition, Aston Martin also plans to continue producing their iconic cars with internal combustion engines for decades to come, beyond 2030, to be specific.
It gets even more exciting in the Formula 1 front. The first F1 car, AMR21, from Aston Martin is set to hit the road during the 2021 F1 season. This is an impressive achievement as it is the first F1 car from the company in more than half a century.
Furthermore, Mercedes also increased its stake in Aston Martin’s share to 20% in the last financial year. This means that the German automaker will contribute not only its finances but car and electronic technology to Aston Martin, which is excellent news.
Overall, Aston Martin is set to drive into a very bright future. So if you are an investor that is eyeing the stocks and the future of Aston Martin, it looks like you won’t be disappointed.
Dr.-Ing. h.c. F. Porsche AG, or simply Porsche AG, is one of Germany’s car manufacturers. The company specializes in high-performance racing cars. In addition, the company also deals in sedans and SUVs and serves a worldwide clientele. Ferdinand Porsche founded Porsche in 1931. However, a new corporate restructuring in 2007 took place, which also resulted in renaming the company to Porsche Automobil Holding SE.
The headquarters of Porsche is in Stuttgart, Germany. Volkswagen AG is the parent company that owns a sizable number of shares with Porsche. Porsche SE trades as PAH3 at FWB or Frankfurt Stock Exchange. According to the 2020 annual report, Porsche employs 948 people all over the world.
Financial breakdown of Porsche.
Note: The financial figures of Porsche in this post are from WSJ Markets. All financial information is in USD thousands.
Revenue – $30.63B
Gross profit – (20,023.20.0)
Profit margin – -15.89%
Adjusted EBITDA – 183.95
Market cap of Porsche
As of March 19, 2021, the market cap of Porsche is $ 31.68B
Growth of Porsche in the last five years.
Looking at the numbers, you would be forgiven for assuming that Porsche does not show good growth. However, Porsche has strong ties with Volkswagen, which is one of the largest car manufacturing companies. In addition, Volkswagen is just behind Toyota in terms of revenue. So it is hard not to consider that one company’s financial success will not affect the other.
According to data on Statista, Porsche’s revenue between 2011 and 2019 increased significantly, which is fantastic news for investors. If you’re looking for specifics, Porsche’s revenue in 2011 was $12.95 billion. However, in 2019 it rose up to $30.62 billion, which is a significant figure.
Although the automotive industry has taken a massive hit in the last couple of years, Porsche’s cars sales have been very steady. All this information points to the fact that Porsche’s stocks are growing. Furthermore, Porsche’s overall earnings are forecasted to grow by 16.86% per year, which is a good percentage.
Future of Porsche.
As auto consumers’ attention goes towards electric cars, Porsche is also poised to produce electric SUVs by 2022. This is also sparked thanks to the unexpected popularity of Porsche Taycan, especially in North America. By 2030, Porsche aims to make up to 80% of its cars carbon neutral by going electric.
The company also plans to develop and manufacture batteries exclusively for their EVs. However, the supercar company has no plans to halt their iconic cars with an internal combustion engine, which will please its clients.
Furthermore, the car lineup from Porsche is nothing short of stellar. Among others, the 911 GT3 is set to get a redesign, with rumors of a hybrid version. During the fall of 2021, Porsche fans can also expect the Taycan Cross Turismo. In addition, the Macan EV that is part of the electric SUVs will hit the roads by spring next year.
For in-depth information about the Porsche Model listing and pricing for 2021, visit this link.
Apart from Porsche’s fantastic efforts, the supercar company is also striving towards a zero-impact company. According to its CEO, Oliver Blume, Porsche is set to pump up to $17.66 to achieve its sustainability as well as digital transformation.
In spite of the glitch of 2020 due to coronavirus, Porsche has been impressive about predicting their future performance. With such a good lineup for the future, whether it is in the form of cars or other plans, it would be interesting to see where this supercar company goes and achieves in the coming days.
IPOs of McLaren and Lamborghini
McLaren Automotive or McLaren is a producer of supercars. It was founded in 1985 by Ron Dennis. Initially, it started out as McLaren cars but later changed to McLaren Automotive in 2010. McLaren Automotive’s parent company is the McLaren Group that owns 100% of its shares. The company has two divisions, which are McLaren GT and McLaren Special Operations. The headquarters of McLaren is in Surrey, UK.
Here is a brief look at the financial breakdown of McLaren’s Q3 results of 2020. The financial information of McLaren is from the company’s website.
Revenue – $ 237.20 M
Percentage of revenue growth – 60%
Adjusted EBITDA – $ 46.99
McLaren and IPO listing.
As part of the restructuring and economic recovery step, rumors of McLaren going public in 2021 through a reverse takeover has been doing the rounds. Furthermore, according to some reports, McLaren also seems to be considering making a deal with SPAC or Special Purpose Acquisition Company in order to go public.
Towards the end of 2020, one of the major funding groups, MSP Sports Capital, along with others, acquired stakes in McLaren. The group is also said to have plans of investing up to $255.97million in the McLaren GT division, which concerns racing. This is a smart move for McLaren to pay its debts and also maintain a front as the ravages of the covid-19 pandemic eases.
Besides, McLaren also has plans to raise between $414.76 and $691.27 to pay down its debts through equity injection. Apart from this step, the supercar company will also attempt to refinance its bonds in 2021, according to reports.
Why is McLaren going for the public through a reverse takeover instead of taking the IPO route?
Reverse takeovers or RTOs are not uncommon in the business world, especially where when it comes to large companies. For the uninitiated, a reverse takeover is when a private company merges with a company that is already public or buys a large number of shares enough to control a public company.
When the shareholders exchange their shares with the public company, the private company qualifies as a public company. The other name of reverse takeover is reverse IPO or reverse merger.
There are many reasons why companies choose the reverse takeover. The process of RTOs happens a lot quicker than an IPO. For a company to undergo the IPO route, a lot of regulatory scrutiny takes place. This means that for a company to complete an IPO, it takes a lot of time.
Reverse takeovers also do not warrant a lot of expenditure as an IPO. This can be a fantastic option for those companies who do not want to spend a fortune in an effort to go public. For McLaren, the deal with MSP Sports Capital is a surefire way to reduce its debts while getting a guaranteed public listing. In addition, a deal with SPAC means that McLaren can also raise funds without a lot of burdens.
Essentially, reverse takeovers allow a company to go public using a shortcut. For McLaren, the decision to go public without a conventional IPO is as smart as it gets.
Automobili Lamborghini S.p.A. or simply Lamborghini is a luxury sports car company. The company’s best offerings are sports cars and SUVs. Its founder is the Italian magnate Ferruccio Lamborghini in 1963. The headquarters of the supercar company is in Sant’Agata Bolognese, Italy. Volkswagen Group presently owns and is also the parent company of Lamborghini.
As the world reeled under the Covid pandemic of 2020, Lamborghini had its best sales record in more than 50 years. The sales record hit more than $2.2 billion, which is an impressive figure. Experts say this is due to the fact that Lamborghini clients love and place orders for unique and bespoke cars and don’t mind paying a high price for them.
2021 also started on a similar note as the supercar company recorded massive orders for the cars. In fact, the orders for Lamborghini cars in the first three months of 2021 are enough to keep the production facilities busy for the next nine months, according to its Chairman & CEO, Stephan Winkelmann.
What about Lamborghini and talks of IPO?
Ever since the last year, talks of Lamborghini going public has been doing the rounds. As briefly mentioned above, Volkswagen Group owns Lamborghini. So as far as reports go, it looks like Volkswagen has plans for Lamborghini to go public.
This talk stems from the fact that the German auto company is considering making Lamborghini more independent. In addition, steps to make a long-term deal of supplying cars also means that it will be easy for Lamborghini to list in the public domain.
Currently, Lamborghini is not offering an IPO, which means you cannot buy its stocks yet. However, if the reports do come to fruition, Lamborghini going public through IPO will be a great move for the company.
Why is Volkswagen Group planning to make Lamborghini public?
For any company, outsiders can only speculate since no one is privy to classified information. However, there are advantages when a private company such as Lamborghini goes public.
Take the example of Ferrari. After Fiat Chrysler put Ferrari on the stock market, the stocks of Ferrari have sharply increased very quickly. Although the sales and the overall performance of Lamborghini are not suffering, putting it on the stock market can be a turning point for the Italian supercar company.
As the parent company, Volkswagen is expected to control major stocks in Lamborghini after its listing. Nevertheless, if you are an investor with a taste in luxury, you might want to keep an eye out for this one. It looks like Ferrari might be racing other supercar companies on the stock market very soon.
It certainly is an exciting time to Investing in Supercar Companies!