Ferrari and Tesla have been two of Morgan Stanley’s favorite stocks in the automotive sector, and for the past few years, Jonas has spoken highly and positively of both. However, Ferrari has a few distinct advantages that may be more attractive to investors, and the reasons are good enough for Jonas to pivot from Tesla to Ferrari for the preferred holding.
Stability seems to be Ferrari’s biggest advantage over Tesla, according to Jonas, who once called the stock as recession-proof as you can get. Ferrari has strong fundamentals and has “levels to pull for both growth or downside protection, within a wide dispersion of macro outcomes,” he said.
Ferrari also plans to dive into EVs, and its volume with that project will be along the lines of the volume it produces ICE vehicles in. Jonas writes that Ferrari “can offer an EV that will be just as high in demand as what investors are used to” from its gas-powered options.
In terms of the stocks, they both have something to offer in terms of growth.
Tesla has been a stock that has provided tremendous growth for its investors. While 2022 was a rough year, the stock continues to recover, and Tesla, over the past five years, is up over 789 percent.
Although it has provided growth, Jonas believes Ferrari is simply safer in an uncertain time. Ferrari stock, comparative to Tesla, did not provide as much as of a return, but still has shown significant growth. Over the past five years, it is up nearly 118 percent, and over 48 percent in the past year.
“We believe investors over-estimate the risk of EVs to Ferrari and misprice the inherent opportunity in EVs coupled with continuing the ICE business on an exclusive basis with price points for ICE approaching $1mn/unit,” Jonas said in the note.
Disclosure: Joey Klender is a TSLA Shareholder, but does not hold RACE stock.
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