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After some lackluster performances in Formula One – the pinnacle of motor racing – it’s finally good to be Ferrari (NYSE:RACE). Recently, the Prancing Horse secured the signature of Lewis Hamilton, a seven-time F1 world champion and winner of a record 103 races, which also led to soaring options volume. Almost as an afterthought, Ferrari printed an impressive earnings report, with ambitions to perform even better in 2024. With so many credible positives, the bears should steer clear. I am bullish on RACE stock.
Lewis Hamilton and Positive Earnings Print Boost RACE Stock
On the financial front, Wall Street focused on the luxury sports car manufacturer’s fourth-quarter earnings report. While the Lewis Hamilton news revved up the fanbase, it’s important not to ignore the Q4 print, which contributed to significant upside for RACE stock on the day.
On the bottom line, the automaker posted a net profit of €294 million or $317.9 million. For the full year, the company delivered a net profit of €1.26 billion or $1.36 billion. On the top line, Ferrari rang up €1.523 billion in sales or roughly $1.66 billion. For 2023, the iconic enterprise posted sales of €5.97 billion or $6.46 billion, representing a 17% expansion from the prior year.
What’s more, these records might not last long. In true competitive form, management anticipates moving to higher peaks. For example, the leadership team sees top-line sales reaching €6.4 billion or $6.9 billion by the end of 2024. Naturally, RACE stock popped up almost 13% on the encouraging disclosure.
Still, the longer-term catalyst is Hamilton joining Ferrari’s F1 team. For one thing, motor racing fans now have a compelling storyline to monitor as Hamilton finishes off his final year with his current unit, the Mercedes-AMG Petronas F1 Team. Further, when 2025 rolls around and Hamilton makes his debut in red, the sports media ecosystem should have a field day.
More importantly, the dramatic boost in interest should help fuel Ferrari’s merchandise business. Generally speaking, the company generates almost as much revenue from merchandise as it does its iconic sports cars. When you combine a superstar athlete with a globally recognized and desired brand, good things are almost bound to happen. And given that Hamilton inked a multi-year deal, the underlying tailwind should last for a while.
Ferrari Call Options Represent a Buy, Not a Short Sell
With Ferrari being the toast of the town, it wasn’t surprising to see RACE stock light up the derivative market’s board. Indeed, in terms of unusual options volume, RACE represented significantly heightened activity. Specifically, total volume reached 11,062 contracts against an open interest reading of 19,083 contracts. Further, Thursday’s volume jumped 627.76% over its trailing one-month average metric.