Tesla vs Ferrari Price Prediction Analysis in Stocks To Buy AI App

 

We asked StocksToBuy AI App Bot for Tesla competitors!

 

Sorting by valuation we can see that Toyota comes second (right after Tesla) followed by Ferrari.

 

 

6 months ago we did the same study, and came up with the prediction that Ferrari is a buy!

 

Since then, Ferrari took +28%! StocksToBuy AI predicted over 20 companies with similar returns!

 

Tesla lost -5%, SP500 took only +10%: the prediction beat the market.

 

 

Coincidence? Probably not.

 

We will detail the up to date analysis so you can follow the thought process.

 

However, nobody can predict the future with 100% accuracy.

 

You can take smart decisions with the help of your AI Advisor, and increase your likelihood of being successful!

 

The trick is to follow multiple prediction forecast: don't stick to only one.

 

Don't put all your money on one stock: even if you have 90% chances of being right, you cannot be 100% sure of what will happen to that particular company.

 

You should invest in 10 calculated predictions: most likely 7 out of the 10 investment price prediction will come true!

 

This is also a reminder that you should always diversify your investments: don't put all your eggs in the same basket.

 

 

1) Business Similarities and Distinctions

 

First we ask our AI Advisors what are the similarities and differences between Tesla and Ferrari businesses:

 

Cutting-Edge Technology:

 

  - Tesla:

 

Renowned for its electric vehicles (EVs) and sustainable energy solutions, Tesla leads the charge in the mass adoption of electric cars. Its focus on battery technology, autonomous driving, and renewable energy integration showcases its commitment to cutting-edge innovation.

 

  - Ferrari:

 

Known for its high-performance sports cars, Ferrari excels in advanced engineering, focusing on aerodynamics, lightweight materials, and powerful engines. Though not in the EV space, Ferrari's dedication to pushing the limits of automotive engineering aligns with Tesla's pursuit of technology excellence.

 

Strong Brand Image:

 

  - Tesla:

 

Revered for its forward-thinking approach, Tesla embodies innovation, sustainability, and futurism.

 

Its brand identity appeals to environmentally conscious consumers and tech enthusiasts seeking modern, electric mobility solutions.

 

  - Ferrari:

 

Symbolizing luxury, exclusivity, and heritage, Ferrari's brand exudes prestige and performance.

 

Its emphasis on craftsmanship, speed, and a rich racing legacy appeals to affluent, discerning buyers seeking status and high-performance vehicles.

 

Differences:

 

Market Focus:

 

  - Tesla:

 

Primarily aimed at a broader consumer base, Tesla's strategy revolves around producing affordable electric vehicles, including sedans, SUVs, and trucks.

 

It targets mass-market appeal by offering diverse EV options to the general public.

 

  - Ferrari:

 

Maintaining an elite status, Ferrari focuses on creating limited-production, high-performance luxury sports cars.

 

Its exclusive approach caters to a niche clientele valuing craftsmanship, speed, and a heritage deeply rooted in motorsports.

 

Product Range and Production:

 

  - Tesla:

 

Known for its diverse range of vehicles, Tesla offers various models with a strong emphasis on innovation and sustainable energy.

 

The company aims for larger-scale production, continually expanding its lineup to cater to different market segments.

 

  - Ferrari:

 

Specializing in crafting high-performance sports cars, Ferrari concentrates on limited and exclusive production.

 

Each vehicle is meticulously handcrafted, focusing on precision engineering, artisanal craftsmanship, and customization, resulting in a smaller and highly coveted product range.

 

These distinctions underscore how Tesla and Ferrari, while sharing a focus on automotive excellence and innovation, pursue divergent strategies concerning market positioning, target audience, and product offerings in the automotive industry.

 

Now that we undestand the similarities and differences between both businesses

 

2) Why Ferrari remains a better buy today

 

Earning per Share

 

Earnings per Share (EPS) measures a company's profitability by dividing its net income by outstanding shares.

 

Investors use EPS to assess a company's earnings relative to its stock ownership.

 

Higher EPS often indicates stronger profitability and potential growth.

 

It helps in comparing company performance over time and against industry peers.

 

EPS influences investment decisions and dividend evaluations, providing insight into a company's financial health and potential returns for shareholders.

 

The best companies to invest in have:

 

  - Steady / constant Earning per Share that don't go up and down,

  - Earning per Share with a constant growth dynamic that lets you foresee what the future holds.

 

 

Tesla vs Ferrari Earning per Share

 

Comparing both stock prices we can see that Tesla surge was phenomenal.

 

The surge was justified by its increase in earnings.

 

We can see that Tesla stock price (in orange) increases in the same pace as its Earning per Share (orange bar chart).

 

However over past year the earnings per share have been dropping for Tesla.

 

We can see that Ferrari earnings per share (green histogram bars) are:

 

  - steady and positive, with little volatility (constant)

 

  - growing at a good pace with higher rate over the past year

 

When Tesla stock price reached its peak (x2 over Ferrari) Tesla earnings per share reached its peak too (x2 over Ferrari earnings per share).

 

This makes sense: people know how to price the stock.

 

However looking at where it stand now, we can identify which stock is underpriced / overpriced.

 

Today Ferrari price is x1.5 Tesla's price.

 

And it's Earning oer Share is x3 Tesla's Earning per Share.

 

We are not saying you should buy Ferrari stock.

 

We are saying if you planned on putting $100 in Tesla, we would recommend you put only $35 in Tesla and $65 in Ferrari instead.

 

 

Price to Earnings

 

The Price-to-Earnings (P/E) ratio evaluates a company's stock price relative to its earnings per share (EPS).

 

It's calculated by dividing the current stock price by the EPS.

 

Investors use the P/E ratio to gauge a stock's valuation and compare it with peers or the market average.

 

A higher P/E ratio might suggest that investors expect higher future growth, while a lower ratio could imply an undervalued stock or lower growth expectations.

 

The P/E ratio helps investors assess potential returns and the market's perception of a company's future prospects based on its current earnings.

 

 

Tesla vs Ferrari Earning per Share

 

We can see that Tesla's PE got shot to the moon during COVID.

 

Is this a good thing? Well if you look at the definition it could be if investors have high expectations that come to life.

 

However only very little companies have PE around $1,000 (you can check the full list in our screeners) and most likely this is only temporary.

 

One of them is AMD (refer to the article about Nvidia below where we explain what is happening).

 

That being said, Nvidia and Ferrari now both have similar PE.

 

This can comfortably back up the previous opinion, when PEs are similar for companies that compete in the same industry, Earning per Share becomes the go to.

 

Ferrari is still a better buy, you should invest $2 in Ferrari share for each $1 invested in Tesla share.

 

Profit Margins (last one, in one line)

 

Profit Margin is a financial metric that measures a company's profitability by assessing the proportion of revenue that translates into profits.

 

It's calculated by dividing net income by total revenue and is expressed as a percentage.

 

A higher profit margin indicates efficient cost management and higher profitability from sales.

 

Investors use profit margins to evaluate a company's operational efficiency, comparing margins across periods or against industry benchmarks.

 

A consistent or improving profit margin signifies a company's ability to generate profits from its core operations, influencing investment decisions and overall financial health assessment.

 

 

The luxury industry (just look at LVMH) has amazing profit margins.

 

Do you know how many cars Ferrari sold in 2023?

 

11,904

 

Their profit margins is 4 times higher than Tesla's.

 

You know what to do next.

 

If you planned on buying $100 of Tesla shares, we would recommend you go instead for $35 in Tesla and $65 in Ferrari.

 

We would love to hear back from you!

 

Please share your thoughts with the community on StockstoBuy AI App.