Tesla made headlines in 2022, but the top-performing auto stock had nothing to do with EVs

This yr wasn’t about which auto producer stock carried out the finest. It was about which stock managed to escape the worst of the yr’s promoting strain.

After significant growth in auto stocks in 2021, this yr proved daunting with the EV startup bubble popping, low automobile inventories and rising rates of interest. That was in addition to fears of a recession and overall “demand destruction” for trade gross sales.

Many of the world’s largest automakers performed well financially this year, but it wasn’t sufficient to offset the outdoors financial considerations that their most worthwhile days could also be behind them.

“We are preparing for a challenging FY23 outlook for auto earnings on demand decline (higher rates), deflation (lower price/mix) and unfavorable changes in the supply/demand balance for EVs,” Morgan Stanley analyst Adam Jonas wrote in an investor be aware earlier this month.

The FactSet Automotive Index, which incorporates automakers and aftermarket components, is off about 38% up to now this yr, as of Tuesday’s shut. All main automakers and EV startups skilled double-digit declines this yr – partially or utterly offsetting their good points in 2021.

Many once-promising EV startups had been amongst the greatest losers, as some bumped into capital troubles or could not scale manufacturing as rapidly as anticipated. Rivian, Lucid, Canoo and Nikola skilled 76% declines or extra yr to date.

Traditional automakers had been ready to mood their stock declines higher than the EV startups. But America’s largest automakers – General Motors and Ford Motor – each skilled declines of greater than 40%, barring any shock rally to finish the yr. Others comparable to Stellantis, Nissan, Toyota and Volkswagen have declined greater than 25%.

The firm with the smallest decline was Ferrari, which yr to date is just down by about 18% − making it the yr’s best-performing automaker stock.

What drove that efficiency? For starters, the storied maker of high-end sports activities vehicles is not like different automakers: it is anticipated to promote roughly 13,000 of its jewel-like sports activities vehicles by yr’s finish − fewer than giants like General Motors promote in a day. But these coveted vehicles exit the door at a median promoting value of round $322,000 every, in accordance to FactSet estimates.

Even at these costs, the ready record for a Ferrari is lengthy. The firm limits its annual manufacturing to protect its pricing energy and exclusivity, a contented scenario that offers Ferrari exceptionally sturdy revenue margins and ensures that its manufacturing facility is not doubtless to be idled anytime quickly.

Most Ferrari fashions had been offered out for the yr by early November, CEO Benedetto Vigna stated throughout Ferrari’s third-quarter earnings call, and he anticipates no drawback with demand in 2023 – regardless of how the world’s economies behave.

Vigna has good causes for that view. Ferrari has a number of new fashions on the means to preserve that ready record lengthy, together with its first SUV-like automobile, a modern V12-powered four-door called the Purosangue that begins at about $400,000 in the U.S. Even at that value – and even for a four-door Ferrari – demand is brisk. Although Ferarri will not even start transport the Purosangue for a couple of months but, the firm briefly stopped taking orders final month after it offered out the first two years of manufacturing.

“The company’s focus on the unique quality and performance of its vehicles is unwavering, and has driven a track record of resilient financial performance, as well as significant intangible brand value and a true luxury status,” BofA Securities analyst John Murphy instructed buyers in a Dec. 13 be aware, reiterating a purchase ranking on Ferrari and a $285 value goal.

Then there’s Tesla, which has confirmed to be one in every of the finest automotive shares for buyers in latest years thanks to its tech-like valuation from Wall Street. Shares of the EV maker have plummeted greater than 68% yr to date.

Much of the decline in Tesla shares has come since CEO Elon Musk acquired social media platform Twitter. The stock is down greater than 50% since the deal closed Oct. 27.

“We believe increasing negative sentiment on Twitter could linger long term, limiting its financial performance and become an ongoing overhang on TSLA,” Oppenheimer analyst Colin Rusch wrote in a note this month downgrading shares to carry out from outperform.

Wall Street analysts anticipate 2023 to be one other uneven yr for automotive shares. Here’s how legacy automakers, in addition to prime rising EV startups, have carried out this yr.

• Ferrari (RACE): -18%
• Stellantis (STLA): -25%
• Toyota (TM): -26%
• Nissan (NSANY): -35%
• General Motors (GM): -43%
• VW (VWAGY): -46%
• Ford (F): -46%
• Fisker (FSR): -57%
• Tesla (TSLA): -68%
• Nio (NIO): -68%
• Lordstown (RIDE): -69%
• Nikola (NKLA): -75%
• Rivian (RIVN): -82%
• Lucid (LCID): -83%
• Canoo (GOEV): -86%

– CNBC’s Michael Bloom contributed to this report.