Ferrari and Block Earnings+Donny Boy Won :(
Ferrari and Block are both dealing with earnings stuff right now, and they went in two very disparate directions. Ferrari stock has fallen eight percent on their earnings, while Block popped seven percent. We’re going to cover both these companies, how genuine these two reactions are, and where each of them leaves the company. Then, we will save the best for last (or worst for last), when we have a lil chat about Donald Trump’s surprising, but at the same time not really surprising, victory
First, Ferrari’s earnings or lack thereof. Pretty much every time Ferrari releases their earnings, it is a hit. It is like clockwork. Therefore, I was expecting both good earnings and a good reaction from the market, even if it was tamped down due to the perhaps excessive valuation (forward P/E of 50). Instead, I got garbage on the reaction side. The intrinsic substance of the earnings was really not that bad though.
EPS easily beat expectations (2.08 vs 1.99) and revenue/EBITDA/adjusted EBITDA/net revenue etc… were all in line with expectations, making this a solid 4.9-5.1 report. I would expect maybe a two percent drop on this based on the steep valuation, but instead, I had to watch my position slip again and again. This was attributed to China.
Ferrari shipped 2% fewer cars overall than this time last year and 29% less in China. The 2% thing is absolutely nothing. If it were to be something, it would be good. I do not want a ton of people to drive Ferraris. As Ferrari continues to make customization more popular and crucially, expensive, it really does not matter to me how many cars that ship or fail to ship. The 29% dip in China also does not matter to me at all. Revenue is completely in line with expectations, and I have no problem with Ferrari sales being primarily concentrated in Europe and the US. If Ferrari is making as much money as expected with a 29% fall in Chinese sales, then the rest of the company must be doing very well. I know I have dissed this possibility, but if China pumps up stimulus because Donald Trump was just elected, then that number will probably reverse its trend.
Really, I saw no problem with this earnings report at all. I feel good about this company, where it is headed, and my investment.
Let’s move on to something more positive before we talk about something more negative.
Okay, Block reports earnings tomorrow, and I am expecting some very, very positive news. You might be wondering, “Henry, if their earnings are tomorrow, why was the stock up eight percent today?” The answer would be general positivity in the market, optimism for earnings, and Block’s exposure to crypto, which Donald Trump has hyped up a lot.
Here is where we will combine the last two parts. Donald Trump was, unfortunately, elected President of these United States. This is absolutely spectacular for my portfolio, and for a lot of my fellow white guys, but really, pretty bad for this country’s future. Mergers and acquisitions are back on the table, as Lina Kahn is almost absolutely out of a job, Jerome Powell is done, and China vs. US relations are obliterated.
I do, desperately, hope that the insane tariffs he is proposing will not come to pass. I pray that those were the ravings of a man campaigning, but you never know. I really hope most of what he promised, to the crypto community for example, was him spewing garbage, since he is not running for president in four years again.
But really, Donald Trump’s presidency will absolutely cripple our economy (and our country) in the long-term, if he does all he has told he will do. However, and this is a paltry thing to exchange our freedom (potentially) for, I expect the Nasdaq to double over the next two years.
I really wish the Democrats knew how to beat this guy. I’m hype for Gavin Newsom and Gretchen Whitmer in four years, but these next two years in particular will be tough. Hopefully by the midterms or at the maximum, the next presidential, I will be rich enough to hire some really good assassins to use on my enemies (joke).
