After racing clear of its rivals for years, Ferrari has been relegated to the back row of the stock market grid.
The Italian supercar maker, the top performer in the Stoxx 600 Automobiles and Parts index for each of the past three years, has fallen by 5.6 per cent since the year began and suffered its worst quarter since the end of 2018.
That is a marked contrast to strong gains by rivals such as Volkswagen, which owns luxury brands Porsche, Bugatti and Lamborghini.
While competitors, particularly VW, have received a boost from the hullabaloo around electric vehicles, the company known for its Prancing Horse logo has run into setbacks including an underwhelming earnings forecast.
Without a clear electric vehicle strategy, Ferrari has also been hurt by an unresolved search for a new chief executive and a broader rotation out of growth names for a company that some investors regard more as a luxury play.
“The stock has become too expensive and earnings momentum is fading,” said Sanford C Bernstein analyst Arndt Ellinghorst.
The car maker gave a conservative earnings outlook for this year in February as it works through disruption from the pandemic on top of the search for a new leader.
Citing personal reasons, Louis Camilleri abruptly retired as chief executive in December, leaving the company facing its second leadership crisis in as many years and complicating the transition toward electric mobility.
Chairman John Elkann said last week that Ferrari was “making good progress with the search process to identify the right leader”.
Whoever takes the helm will face a challenging legacy, with Ferrari’s strategy for a fully electric vehicle remaining an unclear long-shot project.
Mr Camilleri cast doubts over the plan during his last analyst call in November, saying that he did not see the car maker going fully electric and “certainly, not in my lifetime will it reach even 50 per cent”.
However, Mr Elkann said in February that he envisaged Ferrari would make an all-electric car by the end of this decade.
A new chief executive will also need to combine the need to keep pace with tightening emissions regulations while satisfying the love of its power-hungry customers for the traditional thermal engine.
A spokesman for Ferrari declined to comment.
The stock’s lofty valuation multiple relative to other car makers does not leave much room for upset. According to RBC Capital analyst Tom Narayan, Ferrari is less of a car stock and “more of a luxury play”.
Reflecting that status among investors, Ferrari's shares rose by 28 per cent last year, similar to the performance of Birkin bag maker Hermes International and luxury leader LVMH, while most car makers' shares were weighed down by the pandemic.
“The outperformance last year was due to the fact that the stock is perceived as more defensive and something to own when everything else falls,” said Antonio Amendola, a portfolio manager at Acomea.
“In the end, those who can afford a Ferrari can afford it in any conditions.”
This year, stock market dynamics have changed, with investors shifting more toward cyclical stocks and away from defensives as the distribution of vaccines fuels optimism over a global economic recovery.
“With the market rotation, it is normal to see some profit taking,” said Mr Amendola. “Ferrari’s fundamentals are solid and this can be an opportunity to accumulate if the underperformance persists.”
According to UBS Group analyst Susy Tibaldi, concern over the company’s approach toward electric vehicles may not be fully justified.
“We do not think the company is under the same pressure and urgency as its non-luxury peers, due to the fact that a Ferrari per se is not a means of transport but rather a status symbol, and is rarely the first car in a household,” said Ms Tibaldi in a March 30 note.
She assigned a "buy" rating to the stock.