At 40 times forward earnings, the ultimate luxury car brand Ferrari is far from cheap. The stock is trading a few cents below $407 per share, down by a fifth from its all-time high of $519 in July. In the K-shaped economy we live in there is no shortage of wealthy people to splurge a million dollars on an automobile. This explains why analysts tracking the company expect revenue to rise by another 10% in 2026. That’s not the only thing we think can help the stock recover from its recent drop.
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Ferrari’s weekly chart shows an almost complete five-wave impulse pattern. We’ve marked it I-II-III-IV-V, where the five sub-waves of wave I are labeled (1)-(2)-(3)-(4)-(5) and three lower degrees of the trend are visible within wave III. Wave IV looks like a simple a-b-c zigzag correction down to the 38.2% Fibonacci support level where fourth waves usually end. This brings us to wave V, which is the final missing piece of this Elliott Wave puzzle.
If this count is correct, it is time for Ferrari stock to head north again in wave V towards a new record between $550 and $600. Instead of joining the bulls in that area, however, investors should think about taking profits, since a three-wave correction follows every impulse. Given Ferrari’s stretched valuation, it might cut the stock price in half and drag it back down to $300 per share in the next few years.
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