Ferrari was by far the best stock investment you could have made in the auto sector in 2019, but a closer look at GM, Ford, FCA, and Tesla tells a stunning story
Starting from an equal footing and comparing GM, Ford, FCA, Tesla, and Ferrari's 2019 stock-price performance against each other, the clear winner was Ferrari.
Ferrari shares, year-to-date, have risen 70%, versus a 29% increase for the S&P. The Italian automaker has outperformed both the market and the nearest stock in my coverage by a factor of three.
But now for the interesting stuff. You might think that Tesla, which has been on a late-year tear, would have been my No. 2 stock. But Ford actually beat out Tesla, by a narrow margin.
Ford is supposed to be in a bad spot right now, spending $11 billion to restructure its business under CEO Jim Hackett. But for investors, the stock is obviously a bargain.
As for Tesla, its relative performance for much of the year was objectively awful. But of course, the carmaker's shares are hotly traded by longs and shorts, so you could have bought on some of the big dips and made a nice return during 2019.
More recently, Tesla has started to look as though it might have found some footing, and shares are finishing 2019 at record levels, above $400. Tesla now has the largest market cap of the five automakers I follow.
GM and FCA marched along together for the year, with FCA enjoying a late-2019 bump up in price when the carmaker's merger with Peugeot was announced.
GM and CEO Mary Barra have been moving along on an even financial keel, making money, money, and more money. But a 50-day strike by the UAW is likely to weigh on full-year profits.
And now for the most interesting aspect of this chart!
The 2019 gains by automaker were as follows:
- Ferrari: 70%
- Ford: 21%
- Tesla: 20%
- GM: 10%
- FCA: 5%
Only Ferrari, as I've noted, beat the broader market.
But what we see at the end of the year is a remarkable convergence of what we might want to call the US Big Four. They've all wound up in about the same place, underperforming the S&P and coming within 10-15% of each other.
Ferrari, meanwhile, is clearly in a different business. Selling $400,000 supercars and million-dollar-plus hypercars is clearly a lucrative luxury undertaking. Ferrari sold far, far fewer vehicles than the next closest company, Tesla (around 10,000 versus something like 350,000) but entranced investors with its prospects.
More interestingly, perhaps, is that as Tesla has grown, its financial identity has converged with the segment it's in. Elon Musk is running a car company, not a tech company, and 2019 proves it.
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