Ferrari Stock Is Off to the Races on Earnings and Big F1 News

InvestorPlace – Stock Market News, Stock Advice & Trading Tips

The Ferrari biopic, starring Adam Driver as Enzo Ferrari, was snubbed in the Academy Awards race. The film got no Oscar nominations. But investors in Ferrari’s (NYSE:RACE) stock have lots to cheer.

Shares of the iconic Italian luxury car company revved up more than 10% Thursday and hit a new record high after Ferrari reported an annual sales increase of 17%, topping Wall Street’s forecasts. Earnings were better than expected too.

What’s more, Ferrari issued an upbeat outlook for 2024, with CEO Benedetto Vigna saying that it has “stronger confidence” thanks to “exceptional visibility on our order book.” Translation? Wealthy consumers are feeling flush and buying more expensive and customized sports cars. Ferrari said in the earrings report that the fourth quarter sales and its bullish outlook was in part due to strong demand for personalization of its vehicles.

But there may be another reason for Ferrari’s stock surge Thursday beyond the impressive earnings. Formula 1 racing legend Lewis Hamilton, who currently drives for the Mercedes team, is reportedly leaving Mercedes at the end of this upcoming season and join the legendary Scuderia Ferrari team in 2025. That’s a significant win for Ferrari.

Hamilton, who has seven Formula 1 driver championships, is tied with Michael Schumacher, who famously raced for Ferrari, for the most titles of all time. The looming move by Hamilton could give a big financial lift to Ferrari since it may lead to more revenue for the company’s sponsorship, commercial and brand unit, which makes up about 10% of Ferrari’s total sales. Ferrari would presumably sell a lot of its signature red merchandise with Hamilton’s likeness and number 44 on them.

Ferrari isn’t the only public company that could get a boost. Investors may wave the checkered flag for Liberty Media-owned Formula 1 Group (NASDAQ:FWONA), which has a tracking stock for the racing circuit. Formula 1 shares have more than doubled in the past five years, thanks in large part to the rising popularity of the sport. Hamilton is a big part of that, as he was locked into an epic battle for the 2021 championship with Red Bull’s Max Verstappen, a fight that went down to the last race. (Verstappen won the championship and did so again in 2022 and last year). 

Media giants Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX) also stand to gain from Hamilton’s potential move to Ferrari and the increased exposure it will create. Disney’s ESPN, ESPN2 and ABC networks broadcast all the F1 races, as well as practices and qualifying sessions, in the US. Disney announced an extension of its contract with F1 in 2022 that will keep F1 races on ESPN and ABC through the 2025 season. Disney said that ratings for the 2023 season were the second highest ever, trailing only 2022’s F1 races.

And Netflix may wind up getting more streams (and potentially more curious subscribers) for its popular Drive to Survive series. The upcoming sixth season, which chronicles the events of the 2023 racing year, will drop on Netflix on Feb. 23, just a week before this year’s first race. Netflix presumably will have its cameras rolling again throughout 2024 for Hamilton’s likely last run as a Mercedes driver, which will give the streaming giant some juicy storylines for season 7 in 2025.

So as motorsports fans get ready for more big races, Ferrari, Formula 1, Disney, and Netflix investors also have plenty of reasons to excitedly exclaim that it’s “Lights out and away we go!” 

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Paul R. La Monica is a veteran financial journalist with nearly 30 years experience (including more than 20 at CNN) covering the stock market and other asset classes, the economy and other corporate and business news.

More From InvestorPlace

The post Ferrari Stock Is Off to the Races on Earnings and Big F1 News appeared first on InvestorPlace.