What is it to be wealthy? It varies a lot from country-to-country and even within countries. If you can afford a $1,000 monthly car payment, does that make you wealthy? What about a Ferrari? If you can buy any new Ferrari you’re probably wealthy… just not as wealthy as the person who bought a chunk of a luxury automaker.
It’s that time of the year when we start getting financial data from companies, so I’ll use that info in The Morning Dump, as well as the reaction to those filings, to try and get a sense of what’s going on. A good example is Ferrari, which continues to make even more profits as it focuses on the wealthiest end of the market. Lucid is trying to focus on a more mainstream market, though in the meantime it’s managed to find one extremely wealthy buyer.
On the lower end, there’s a lot of action in used cars, though there’s some indication from Carvana that there’s only so much margin to squeeze out of those buyers. In North America, Stellantis is doing better than in the past, though again it’s running into profit challenges.
Ferrari Remains An Exceptionally Good Business
For all of the talk of the possible failure of the Ferrari Luce, the car is sold out for the first year according to the company. If there’s going to be a negative impact on the company overall it certainly hasn’t happened yet as the automaker’s second-quarter financials show a company that can turn obscenely fast and gorgeous cars like the F80 into huge profits.
I’ll talk about Stellantis in a minute, but the companies share an owner, and it’s wild to think that it took Ferrari selling about 3,600 cars to make more than $500 million in Q2, whereas Stellantis sold 1.6 million cars to make $336 million. Ferrari is a luxury brand built on scarcity and there will always, I think, be buyers.
A good example is the Purosangue, which starts at more than $400,000. Add the apparently popular Handling Speciale package and a little paint, a few options, and suddenly it’s a $500,000 four-seat crossover.
“The robust results achieved in the second quarter reflect our disciplined execution and the continued strength of our strategy. A sustained trend in personalizations allows us to raise the guidance for the year” said Benedetto Vigna, CEO of Ferrari. “In a single quarter, we introduced the Ferrari Luce and the Ferrari 12Cilindri Manuale: two very different sports cars that embody the same Ferrari DNA and demonstrate how we blend tradition and innovation in unique ways.”
Ferrari is also a company that makes money off of motorsports, as opposed to losing money on motorsports, which is impressive. The company did so with more sponsorships and the rental of engines to other F1 teams,
For all the shakiness of the overall car market, the highest end isn’t having any issue selling cars. Ferrari has filled its order book through 2027, meaning if you want to get a new Ferrari you might be waiting until 2028 to get something special.
A Saudi Prince Bought Lucid — Not A Lucid. A Whole 5% of The Company
Yeah, buying a Lucid is cool, but buying a whole chunk of the company at a discount is cooler. Per his own tweet, Prince Al Waleed bin Talal Al Saud, bought 5% of Lucid Motors.
قدّم مكتبي الخاص الإفصاح المطلوب للـ(SEC) بشأن حصتي البالغة ٥٪ في @LucidMotors، التي استحوذت عليها بقيمة سوقية للشركة تقل عن ملياري دولار أمريكي.
My Private Office filed the required SEC disclosure regarding my 5% stake in @LucidMotors, acquired at a market cap of less than $2B.
— الوليد بن طلال (@Alwaleed_Talal) July 28, 2026
The entire company is already a there-but-for-the-grace-of-the-Saudi-Public-Investment-Fund kinda operation, and this only strengthens the ownership stake that the country and its royal family have in Lucid. I think there’s been a concern lately that the PIF might look at Lucid the way it looked at LIV golf due to weak financials and yank its support, but the opposite seems to be happening.
Not only did the purchase of stock show a commitment to the brand from the Saudi family, Prince Al Waleed seems to have bought during the dip that happened when a blog falsely (according to Lucid) claimed the company was considering bankruptcy and saw the stock drop by as much as 57%. The price of the stock has since gone up (seemingly helped, in part by the stock purchase).
Depending on when exactly he purchased, he could have seen a large increase in the value of his stake.
Stellantis Had A Positive Quarter Thanks To Truck/SUV Sales, But Profits Lagged A Bit
This time of year always reminds me that topline numbers aren’t always a great indicator of reality, or at least, of the generally accepted perception we call reality. Earlier this week, Ford reported a quarterly loss and everyone got excited and the share price went up. This quarter, Stellantis has swung from a loss to a gain, prompting its Milan-traded shares to immediately drop (shares on the NYSE were also slightly down as of writing).
What’s going on here? A lot of it is the extremely narrow profit margin that Stellantis posted as CNBC reports:
Stellantis posted industrial free cash flows of 1 billion euros at the end of June, comfortably beating Citi’s forecast of 600 million euros.
Analysts at the Wall Street bank said that while this figure reflects improved operating performance, the auto giant’s adjusted operating income margin remains at a “very low” level of 1.8%.
Positive free cash flow is obviously welcome, analysts at Citi said in a research note to clients. “Nevertheless, we expect investors will await more evidence of positive operating performance before revisiting STLA,” they added.
If you’re curious, here’s the full financial report. The biggest news is in North America, where increased sales and the sales mix (a lot of trucks) led to a net revenue increase of 32%, which covered up for otherwise flat or slightly negative returns pretty much everywhere else.
This didn’t really lead to a lot of margin, though, which is what the company needs to find in order to show that it’s truly performing and not just squeezing what profits it can out of Americans who get good deals on vans/are willing to spend extra for a V8.
“The second quarter was marked by continued progress, led by North America and supported by important contributions from all other regions,” said CEO Antonio Filosa. “We improved performance across our key financial metrics with Net revenues, AOI and Industrial free cash flows all showing significant gains. With implementation of our FaSTLAne 2030 strategy well underway and this year’s exciting new product launches on time and on track, we remain confident of delivering our 2026 financial guidance.”
After pursuing an incomplete EV strategy, I think Stellantis has a decent plan for the future. It’ll take some time, though, and some investment, but I also think it’s telling that the company has yet to really be able to find any traction at the affordable end of things in North America,
As Cox Automotive’s senior economist Charlie Chesbrough pointed out this week, that’s sort of the larger market story in general:
July sales are holding up despite significant economic uncertainty. Stubbornly high gas prices – with no relief in sight – and historically weak consumer confidence have not discouraged new-vehicle buyers, as might be expected. The market today is being driven by more affluent buyers, so they may be less impacted by inflationary pressures and economic uncertainty. If the economy and stock market can maintain their current growing but volatile path, vehicle sales will likely follow.”
Stellantis has plans to make more affordable cars, but in the interim squeezing profits out of the higher end of buyers is seemingly the only way to secure any profits at all.
Carvana Is Also Struggling With Margin Growth
With the new car market generally skewing towards those with the money to afford higher payments, there are still plenty of options for buyers who can’t stretch to spend $1,000 a month. Some buyers are downsizing, and the subcompact crossover and mid-size car segments were the fastest growing in July.
Another option for buyers is to go used, and Carvana has absorbed a lot of that demand. What Carvan hasn’t been able to do, though, is expand its margins as it increases revenue.
The online auto retailer brought in a record $769 million in adjusted earnings before interest, taxes, depreciation and amortization in the second quarter, the company said in a statement. That’s barely ahead of the $766 million average of analyst estimates compiled by Bloomberg. Gross profit per unit also declined, an indication that reaping earnings from its growing business is becoming harder work at a time when industrywide used-car sales slowed.
This fits into the larger picture I’ve been seeing in Q2 filings. The economy feels uncertain, but it’s not yet resulting in a big drop in sales or even profits as some automakers manage to squeeze margin out of buyers who feel secure. Anyone who has to make money from buyers who don’t necessarily feel as flush are still seeing demand, but that demand isn’t able to drive huge profits.
I do think some automaker is going to crack an affordable vehicle that makes decent margins, and they will be rewarded for it.
What I’m Listening To While Writing TMD
We had two big losses in the music world this week, with the death of both Kavinsky and Glen Hansard. Due to his work on the soundtrack for the film Drive, I’m going to start with Kavinsky and “Nightcall.” What a jam. RIP.
The Big Question
How do you personally feel about the economy? Secure? Insecure? Do you not think about it at all?
Top Photo: Ferrari
TBQ: Very nervous about the economy. Trying to sell a house I bought 2 years ago, and having zero luck. Currently paying 2 mortgages, which sucks. We did move somewhere with a lower cost of living, which helps quite a bit, and we pay cash for cars so no car note is nice, but everything could change depending on the decisions of one person who apparently has no check on their power. Stressed is probably the short answer to this.
I am a small business owner, born in the 50’s, raised in the 60’s, high school in the early 70’s.
The economy has always been up and down.
In my tool & die business, we are surviving, but not thriving.
We mainly build & repair plastic molds. When I started my business we did tons of automotive interior trim parts, A/C outlets, gap hiders, cup holders, ETC.
That business has gone to China / low cost countries. It will not be back.
Our smaller size customers have diversified to other industries.
We are seeing an uptick in new projects, this means new products are coming on line in the US. Some companies are moving production back here to shorten supply lines.
How much wealth you need to retire comfortably depends on location. .
I was at a training session in Chicago with people from all over the country.
On a break, we were talking about wages vs the price of a house.
Cheaper to live in Iowa, VS Chicago or the east coast.
Hard to say where team Coke VS Pepsi will take our country.
There will be winners and losers with every new law, rule, regulation.
My suggestions to build wealth
YOU, are your biggest asset, take care of yourself so you have the energy to roll with punches.
Be careful with debt, keep the terms short and buy when interest rates are low if possible.
Diversify your investments, some in a 401K, some in property, some in a business possibly.
The economy is sliding downward, and the corrupt politicians in power are simply getting more wealthy through grift, lies, and blatant stealing by having access to information (or creating national policy that affects the value of commodities like crude oil) and acting to benefit themselves and those within their inner small circle.
Why our US youth aren’t protesting in the streets and disrupting our routines is a symptom of apathy and hopelessness, much to their peril. I can only do so much. They have more collective power than they realize.
I’m not going to be around for the collapse of the US dollar’s value, our country’s inability to pay the interest on our overwhelming national debt and the ultimate demise of a life with hope for a future as our environment and climate degrades in parallel.
Damn, I know I sound profoundly pessimistic. Yet with someone in the White House who openly accepts bribes, and the other branches of power no longer adhering to values of honesty and morality for ‘doing what’s right’ for those not in power, it’s extremely challenging to be hopeful for a change for a better tomorrow.
It’d be great to be proven wrong; there’s about 15-20 years to do that.
The K-shaped economy, a term I had never heard of until a couple of years ago, is real. That there’s a guy, on paper, who has a net worth a MILLION times more than mine (and mine is $1,000,000+) blows my mind. The news that EM is resurrecting his PAC just in time for the midterms is not comforting. I will almost reflexively vote against any candidate on my ballot he supports.
Given the level of grift at the top of the administration and wild gyrations in the stock markets as of late, I wonder how many cronies are getting a heads up about when things are about to go down and then bounce back up.
TBQ: Personally, I’m angry. We’re the richest, most powerful nation ever, and we collectively choose to use this power for evil. And we’re pissing away that clout as I type, as we slide into second or third place.
This knowledge makes my relative financial comfort (retired, own my home outright, adequate investment income) feel empty.
I worry about people. I never feel I do enough to help.
But subscribing to yuz guys is something, I guess.
I’d be interested in how much money Ferrari is making on branding and other non-car items. At 500 million in profit, that’s obviously not all from cars, because that would be over $138K per car in profit.
It probably isn’t that far away… maybe $100k
My ADHD brain can be a blessing and a curse; something just seems to stick out and never go away. Many moons ago, I watched something on Ferrari and how they make their money. A VAST majority of it is from merchandise….They make more than what they do on car sales, which is a business model I can’t see many others pulling off. They realized what their branding is worth and what people are willing to pay to own just a piece of the name Ferrari if they can’t drop 6 plus figures for a car that, in the past, has questionable performance figures. They’ve carried the old saying “race on Sunday, sell on Monday…or at least during the race weekend with several merch trucks pulling up.” or something along those lines.
Ferrari is an S&M dominatrix for rich people. They treat their customers like crap and the customers keep coming back for more. Buy an ugly, crappy car just so you can upgrade in a year to another ugly, crappy car (rinse and repeat) until you get approved for the nice car you actually want? Sign me up, Madame Ferrari!
When even Jay Leno won’t play ball, you know somethings wrong. https://youtube.com/shorts/jukqhwN8g20
TBQ: I feel very insecure about the economy. The big topic in my head (at least today) is the constant high inflation making everything more expensive for me and my family. But health care costs, supporting my wife’s small business, taking care of my kiddos (and getting them ready for their future), and hoping to keep my job and retire before I get aged out also come to mind.
On top of that, the folks in power just don’t seem to give a shit about anyone other than themselves, their close friends, and anyone who gives them money to keep their power. So the policies they pursue continue to make it harder for the bottom 95% of their constituency. I used to think this was mostly due to sheer incompetence, but lately I’ve become open to the idea that these are all deliberate acts.
And you’re damn right I think about it. Especially at 2am in the morning, sometimes for a couple of hours.
Scam Likely, please quit calling me! 🙂
TBQ: How do you personally feel about the economy?
I’m alright, prices on everything raising from the Kerfuffle in the Middle East, coupled with me taking a pay cut to go from contractor to full-time sucks. However, cheaper and better insurance, wife got a raise, and I have plenty of OT opportunities to make up the difference. (only 5hrs/week needed) Plus the company I went full time with didn’t lay off anyone during the 08 Recession in an industry that just obliterates its employees at the slightest sign of sales going down. I’ve also now have a great manager that has fought for me to get a raise already that puts me back to essentially where I was as a contractor. Plus, I am blessed with two beautiful kids I now get to spend more time with. There is more to life than money, and I can always make more.
Something tells me that was not a very high bar to clear.
The market in genearl sucks, and is even worse for those who can’t afford to be in the stock market. Trying do downsize in anticipation of retiring is hampered by the inability to sell stuff that is marketable when the economy is doing fine. So, the local thrift stores will be obtaining stuff that should have value at any other time than under this regime. If it isn’t worth at least $20 at this time, it isn’t worth trying to sell.
Anticipating retiring in a year or so, as the job I have is the best ever, with great everything, but I’m at the age when I should have retired a few years ago, but a friend recruited me into this job, and with the salary and benefits, and how great it all is, retirement is still pending, but I am waiting for the company to reach a specific goal with the FAA for prides sake to be a part of a really big deal.
I bought a house over a decade ago in a decent area when it was a bit of a stretch on my income then. My income has gone up thanks to changing jobs a few times. I’ve got some seniority now so I won’t be first laid off. Maybe have to take a position further from home, though. Somehow the house more than doubled in assessed value. Yippee? It’s all ink on paper until it comes time to sell. Which won’t likely be until I’m too old and feeble to take care of it.
I try not to think about the economy at all. I rarely succeed. Ultimately, I am doing fine. I live quite frugally as a rule, despite my current house building idiocy which has DEFINITELY been wildly affected by Trump’s idiocy. It was supposed to be done before he took office. I have to laugh or I would be crying. I can still afford it, but the situation sucks.
Wealthy is when all your bills are paid without having to worry about it, with a decent amount of money left over every month.
This sort of reminds me of a discussion I saw on a retirement Reddit a while back. At $5 million you can retire and fly first class, but probably shouldn’t be flying private. At $50 million you can fly private, but probably shouldn’t own your own plane. At $500 million you can own your own plane, but you can’t buy a sports team (or an automaker, I guess).
I’ll probably never have any of those amounts, but if I ever do I hope I don’t get stuck on the hamster wheel of always needing to move up to the next level.
I’m offended that you didn’t mention my 2 shares. 😛
That’s a very nice way of describing their so-called “EV strategy”.
That said, this sort of backs up what I’ve been saying about the new leadership at Stellantis. Yes, a lot of what they’re doing is only helpful in the short-term, but they had to survive the short-term to make it to the long-term, and it seems they’re doing that. Now the big question is whether they’ll make the investments to get to a more sustainable place.
TBQ: I’m doing fine, but I’m definitely waiting for the other shoe to drop. I’m hearing more and more concerning things about how the AI boom is being financed, which make me think that when the bubble pops it could be worse than most people realize (and most people already expect it to be bad). Everyone keeps saying it’s not another GFC, but the depth and complexity of the fraud happening right now makes me wonder. There are an awful lot of financial parallels to the GFC, and we probably haven’t even uncovered all of the shady accounting that’s happening yet.
I’m not sure the K shape will keep its shape much longer. It’s a global issue almost everyone is exposed. The AI bubble is starting to burst. What happened in South Korea is a warning to that. Chinese have already been struggling. Real estate is under a massive correction almost everywhere. Commercial real estate is not doing good at all. Lots of foreclosures when buildings sell it’s for a fraction often below a decade ago sometimes a multi decade low. Prescious metals are down because they have flooded the market in many places where people have to unload them. Retail investors see crypto for what it is. It keeps going down. Inflation everywhere. The global economy has been pumped from all corners for too long. They had predicted a recession for 2020 instead you had just about every country in the world dumping money into preventing it.
Saudi stuff as always seems suspicious. But they do need to show they are invested and will put up more money as needs be. If you were trying to shore up the stock and rumors it’s about the only thing you can do.
Ferrari lives in a bubble they can sell whatever car they want because the people buying them want to buy the next car. They are a lifestyle / luxury good company that dabbles in cars as a product. They were always going to sell all 500. You can find 500 people that have enough money to not care but have a chance to buy whatever is next.
So Lucid is even more of a Saudi-backed company?
Abdul Latif Jameel (a Saudi company, even though it sounds like a name) owns an undisclosed share of Rivian, in addition to Amazon, Ford, and VW, who make up for about 36% of Rivian’s stock.
Hmmmm. I’m not entirely sure how I feel about this, but initially, I’m uneasy.
Not that either company makes anything currently that I want to buy, so I suppose any potential misgivings I have about Saudi backing are moot…
Let me get this timeline straight:
Come on.
If it looks like a duck, walks like a duck, quacks like a duck… this is some insane levels of market manipulation and fraud.
In 2026 if you’re not committing financial fraud, you must be poor.
COTD
More evidence that perception is actually more important than reality.
Also the economy’s garbage you can’t have the majority of people being too poor to afford basic necessities and grow the economy.
I don’t really think about THE ECONOMY. I think about my own situation. I think about how much it costs to get groceries. I think about the electric bill that keeps increasing. I think about how my investments are doing and worry that they won’t be enough to provide for my next 20 to 30 years. I guess I sound pessimistic, but I actually have it really good. I bought my house in 2020 and have a small mortgage with a really great rate. I have two really good cars that are both paid for. My project car is running and the new suspension, brakes, and steering have made it nicer to drive. Anything I put into it is discretionary at this point. I have two great dogs and an asshole cat (who I actually love). My wife is supportive of pretty much anything I want to do, within reason.
You sound fortunate and recognize that fact. Kudos! 🙂
I am definitely very fortunate. I have made plenty of mistakes along the way, but I’ve also had a lot of good people around me who helped me recover from them.
Everybody makes mistakes. I know a guy who is (or at least was a few months ago) sitting on some very expensive company stock because his company is part of the crazy AI boom, and he knew he needed to sell at least part of it and get diversified, but he was so terrified of putting it in the wrong place that he left it in the wronger place (i.e. all tied up in his own company’s stock).
Being afraid of making mistakes can cause you to make bigger mistakes. The most important thing is to regularly re-evaluate where you are and if you made a mistake, fix it and learn from it.
It’s nice (but not always possible) to learn from others’ mistakes rather than have to make your own, sometimes more than once.
I try, but don’t always remember, to take my own advice on this.
Way back when, my HS friends and I used to joke that our retirement plans would be to take up chain smoking and BASE jumping.
Sucks when that sounds like the most reasonable option
Point of interest: The economy and how Wall St should be reacting properly to it are not aligned in any meaningful manner. This morning, Egypt was attacked by drones, damaging some oil infrastructure, two ships. The potential widening of the conflict into a regional war, and possibly into the next world war, is not even on Wall St’s radar. They are out of touch of the world’s issues and those of the common people.
I think the buying public is definitely insecure about the economy. media stories about AI job loss, gas prices due to middle east fighting(which most of us don’t understand what is driving it), and inflation/tarifflation all seem to be hurting people’s ability to drive the economy via Buying.