By on October 20, 2015


According to The Truth About Cars’ stock exchange bureau chief, Ferrari is good and Tesla is bad today.*

Tesla shares have dropped 10 percent on news today that Consumer Reports would pull its “Recommended” rating from the Model S because of concerns about the car’s reliability. That’s bad.

Also, initial shares of supercar-maker Ferrari may be going for more than expected due to the stock’s appeal on office walls and potential value people may find in owning another Ferrari-branded item beyond overpriced shirts. 

Consumer Reports released its Annual Auto Reliability Survey on Tuesday and said that 1,400 Tesla owners reported higher-than-average problems with their cars. The consumer group reported that owners detailed problems with the car’s “drivetrain, power equipment, charging equipment, giant iPad-like center console, and body and sunroof squeaks, rattles, and leaks.” Or basically everything.

Consumer Reports also detailed problems with 2013 models, the first year Tesla offered the Model S. Those owners say problems with the battery and charging equipment have downgraded the car’s initial “average” rating to a “worse-than-average” rating.

Ferrari is expected to announce pricing for its IPO on Tuesday. That company reported that its price may be higher than the initial $48-$52 per share due to oversubscription of the stock.


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(a) for any investment decisions made on the basis of this information. This website does not constitute financial advice and should not be taken as such. TTAC urges you to obtain professional advice before proceeding with any investment. 

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We don’t actually have a stock exchange bureau chief. 

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25 Comments on “TTAC on The Trading Floor: Ferrari Good, Tesla Bad*...”

  • avatar

    “How can the numbers be going down???”

  • avatar

    Apparently: Trading Places is a dummies guide to the stock market

  • avatar

    Why didn’t you report Consumer Report’s reliability rating on Ferraris? If the anticipated share price is going up, it must be excellent.

  • avatar

    I think it’s common for Consumer Reports to get it wrong on all new cars. I bought a ’93 Saturn on the strength of the recommendation they gave the car probably in ’93, maybe ’92. I regretted that decision. The oil use problem became evident when the car had less than 20k on it, the alternator went at 80k, and the thing started nickel and diming me to death at 130k–like every two months I was taking it in.

  • avatar

    Why the heck does CR recommend a vehicle before they have reliability data? Isn’t “average” reliability a criteria for the recommendation?

    Or did prior years Model S have “average” reliability and there has just been a drop recently?

    • 0 avatar

      CR has long been infiltrated by car guys. They’re subtle and restrained, but every once in a while you can see them nudge things toward the flagrantly irrational.

      • 0 avatar

        But why even have rules for a recommendation if they aren’t following them? Maybe my knowledge of the CR’s recommended label is out of date.

        • 0 avatar

          My subscription has lapsed and I only once briefly glanced at the Model S page as a result of a comment on TTAC.

          I vaguely remember an explanation by CR staff for the unusual recommending of such a new product as being a result of both its awesome performance and revolutionary impact upon the auto scene. Or words to that effect.

          If that isn’t car guy spoor I’ve never watched a Tarzan movie.

        • 0 avatar
          Lack Thereof

          The rules haven’t changed. “average” is still the minimum reliability required to get a recommendation, and as of April 2015, all model years of the Tesla Model S received an average reliability score.

          The unusual thing here is revising a reliability score downward, outside of the annual April reporting schedule.

    • 0 avatar
      Richard Chen

      CR did have average reliability data for the Tesla Model S last year, there’s an asterisk if they have only a year’s worth. They used to automatically recommend some new designs, but got burned by some first year Toyota and Honda teething problems. Speaking of which, the Acura TLX and RLX didn’t do so well.

      They do un-recommend cars such as the Scion xB if they get too few response, which happened to be last year’s most reliable car. This year, it’s the Prius c, which didn’t score high enough for a recommend.

    • 0 avatar
      Lack Thereof

      CR has reliabilty data for the Model S dating back to 2012, and it’s been ranked as “average” every year. It’s weak points have always been “Body Integrity” and “Body Hardware.”

      It’s not unusual for a Consumer Reports reliability rating for a particular year and model to change between one April’s ranking and the next, with the accumulation of another year’s use data… but I can’t remember a case where they’ve revised the ranking in the middle of a year, rather than waiting for next April’s car issue to come out.

  • avatar

    Wow, TTAC’s disclaimer is more than twice as long as the article. How long before our comments are moderated by lawyers?

  • avatar

    Regarding the consistency of Consumer Reports’ automotive reviews:
    Way back in the 1970s, Consumer Reports had a puritanical, strictly utilitarian attitude towards cars, and focused their reviews on the fuel economy, reliability, and safety of autos.
    Fast-forward to the 2000s, and you realized that this was not your grandfather’s Consumer Reports: The reviews highlighted reliability, but acceleration and handling were no longer guilty pleasures to be left to discussion by the auto-magazine reviewers.

  • avatar

    Ha Ha, I was the one that called them out about their BS ratings and obvious discrepancies with their recommendations vs their statistics as posted in their magazine last year and they were quite pompous and somewhat nasty about it when confronted. Watching them have to retract their recommendation and eat crow is quite satisfying. Their coverage of Tesla has been beyond biased and it is coming back to bite them in their you know what.

  • avatar

    Sold to you, sucker. Ferrari is at peak profitability after a 20-year run of rapidly expanding production of ever-pricier cars for sales into pools of rapidly expanding wealth in China, Eastern Europe, and the Middle East. US and Euro unit sales are relatively flat, and we’re now seeing a big slowdown in China along with a loss of petrodollar income streams in the Middle East & Russia.

    Over time they’ll lose whatever pricing leverage they had with suppliers, now that they’re decoupled from FCA’s broader buying power. The cost of creating high-technology high-performance cars will increase, too, and McLaren is providing real competition. This stock is a luxury good based on fundamentals that are far more likely to deteriorate than grow over the next five years.

    I *hope* I’m wrong, but I’m feeling pretty cynical about this IPO.

  • avatar

    “It – was – the – Dukes! It – was – the – Dukes!”

  • avatar

    Great movie.

    I also like my Ferrari shirts. Expensive, but good quality.

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