PIRELLI

Analysis of Pirelli share price

BUY   SELL
72% of retail investor accounts lose money when trading CFDs with this provider.
 
Chart provided by Tradingview

If it is important to follow the live price of a stock on the stock market on which you want to invest, it is just as important to know the information concerning the analysis of the historical price of this stock from the stock market graphs and to know the activity of the company that issues this stock. Let us take interest here in the Pirelli share for which we are going to bring you all these precisions.

Elements that can influence the price of this asset:

Analysis N°1

First of all, Pirelli could quickly benefit from the high growth potential of certain emerging markets such as India. This is generally true for several markets that should prove to be real gold mines for tire manufacturers, including China and Brazil. India remains Pirelli's favourite target because, while there are already a few small local manufacturers in the country, no major company has yet established itself there.

Analysis N°2

We are also currently witnessing significant changes in the way people consume tyres. Consumers' needs have changed significantly and they are increasingly favouring tyres with a high level of safety and grip, which is one of Pirelli's strong points.

Analysis N°3

Although Pirelli is doing everything possible to distinguish itself from its rivals, the competition in the tyre sector remains very strong and should remain so in the years to come with the rise in power of certain major brands such as JK, Apollo, Dunlop, Bridgestone, Michelon, Good Year and Cooper Tyres for the Indian market. The Italian manufacturer will still have to make a lot of effort to keep its market share.

Analysis N°4

Another threat concerns the control of the production costs of Pirelli tyres. Indeed, there is currently a significant increase in the price of raw materials, but also in technology and innovation, which could have consequences on Pirelli's competitiveness.

72% of retail investor accounts lose money when trading CFDs with this provider. This is an advert for trading CFDs on Plus500

General presentation of Pirelli

The Italian Pirelli Group is a world-renowned specialist in the manufacture and sale of tyres. However, its activity can be divided into two main sectors. The largest part of its turnover is of course realised by the sale of tyres, but a small part of it concerns the production of electricity by renewable energies.

With 22 production sites around the world, Pirelli serves the Italian, European, American and Asian markets.

The price of Pirelli shares is currently quoted on the Italian stock exchange MTA. Its quotation is included in the calculation of the FTSE MIB stock market index.

Analysis of Pirelli share price
72% of retail investor accounts lose money when trading CFDs with this provider. This is an advert for trading CFDs on Plus500

The major competitors of Pirelli

The Pirelli group has to face the daily threat of some very aggressive competitors, of which we propose to give you a quick presentation here:

Bridgestone

This first competitor is of course a Japanese tyre manufacturer which was created in 1931 and which has since become one of the giants in this sector. Indeed, this international company is currently one of the most important tyre groups in the world and is even ahead of Michelin.

Goodyear 

Another group to be monitored in the context of Pirelli's competition analysis is the Goodyear and Rubber Company group, which is an American company that has been in existence since 1898. The group is currently the third largest tyre manufacturer in the world and produces tyres for cars, aircraft and trucks. The company is also active in the manufacture and design of belts, hoses and other rubber products, as well as chemicals related to the rubber industry.

Michelin 

Finally, the third and last competitor of the Pirelli group is none other than the world leader in this sector of activity, namely the French group Michelin. This French company based in Clermont Ferrand designs and markets products for all types of vehicles such as cars, trucks, two-wheelers, airplanes, civil engineering equipment and agricultural machinery. This multinational company is also listed on the French CAC 40 index and has industrial operations in many countries. It currently employs over 111,700 people.


The major partners of Pirelli

If the Pirelli group has many enemies in its sector of activity, it also has some partners and regularly sets up strategic alliances with other companies or with the aim of enhancing itself and gaining growth. Here are two concrete examples of recent partnerships that the group has put in place.

Maserati

One of the longest partnerships that the Pirelli Group has established is undoubtedly the one signed with the Maserati Group, which has lasted for a century. In fact, the two companies began their collaboration at the beginning of the last century. At that time, the tyres developed by Pirelli were still called "Stella Bianca". It was also at this time that Giuseppe Campari won the French Grand Prix in 1933. But it was the 250F single-seater equipped with the brand's tyres and driven by Fangio that undoubtedly earned the tyre brand its current recognition.

French Grand Prix

In 2019, the Pirelli Group has collaborated with the French Grand Prix. The group has indeed become the official sponsor of this world F1 event for the second consecutive year. The eighth round of the Formula 1 world championship took place on the famous Paul Ricard circuit in June this year. Pirelli has been a partner of Formula 1 since 2011 and the renewal of this contract makes it its partner until at least 2023. But as for the other partnerships that Pirelli has been able to put in place as a sponsor in Formula 1, they are much older and even go back to the 1950 world championship.

72% of retail investor accounts lose money when trading CFDs with this provider. This is an advert for trading CFDs on Plus500
The factors in favour of a rise in the Pirelli share price:

Before implementing any long-term investment strategy, it is necessary to understand the capacity of a stock to attract new buyers in the months and years to come. These capacities are directly linked to the future profitability of the company and therefore to its ability to face future challenges. To obtain such information, it is ideal to know the strengths and weaknesses of the company. In the case of the Pirelli Group, we will help you analyze this data by first summarizing the main strengths of this company, which are listed below in detail. We will then come back to the shortcomings of this group.

  • One of the main strengths of the Pirelli group at present is its ability to focus primarily on the consumer segment. In fact, for some years now, Pirelli has been implementing a precise strategy aimed at concentrating its efforts on this segment, particularly through the design and production of tyres for passenger cars, but also for two-wheelers such as motorcycles, scooters and bicycles. This market is particularly profitable compared to the professional segment, which has allowed Pirelli to increase its sales.
  • In the same way, Pirelli has chosen to concentrate on high-value segments as a priority. As part of its current strategy, the group is working hard on the so-called High-Value segment, which includes, among other things, car tyres and 18-inch tyres, also known as "new premium tyres", "specialties and super specialties", which meet very specific customer needs, but also motorcycle tyres in the premium range, new premium car tyres for large cars and other specific motorcycle tyres. These products offer much better margins with increasing demand, although volumes are not as high as for traditional tyres.
  • In order to offer products that perfectly meet the needs of its customers, the Pirelli group redoubles its ingenuity by regularly carrying out tests and surveys and by giving its customers a say. The customer management department is designed to constantly improve the quality of the products and thus increase the loyalty of existing customers and attract customers who were previously attached to the competition. Listening to its customers requires a lot of time and investment from Pirelli, but the benefits are there.
  • The Pirelli brand can also rely on the reputation of its tyres for motor sports. Indeed, the tyres produced by the group are recognised as highly technological equipment. As a result, Pirelli has been one of the exclusive suppliers to teams such as SBK for many years. In 2011, Pirelli was the exclusive supplier to F1 and sponsored more than 1,700 motor races worldwide. This presence in motor sports naturally gives Pirelli a high profile and helps to improve its brand image and promote the quality of its products.
  • This naturally brings us to the final strength of this Italian company, which is the emphasis it places on the performance and style of its products. All the tires produced by the brand aim to achieve the best performance while being aesthetically pleasing and easily recognizable. They are known for the safety they provide to the driver with a very high level of grip compared to most of its competitors' tires, on all types of terrain.
The factors in favour of a drop in the Pirelli share price:

Having reviewed the various strengths of the Pirelli group, it is necessary to compare these strengths with the weaknesses of this company in order to have an objective overall view of its ability to face the future with confidence. The following is a summary of the main weaknesses of this group with some additional explanations.

  • If the Pirelli group is currently concentrating its activities on the consumer tyre segment, it is following a major and recent restructuring that analysts do not all see in a positive light. Indeed, this restructuring favours the individual consumer segment but leads to a very significant drop in activity in the industrial tyre segment. Although the profitability obtained through these changes is real, this restructuring does entail a long-term risk with an almost exclusive exposure to a single segment and a lack of diversity which could harm the brand in the event of a crisis in the particular automotive sector.
  • It is also regrettable that this concentration of Pirelli's activities on tyres for the consumer market is leading to a fall in margins. Margins on tyres for private individuals are in fact much lower than those for industrial tyres. Of course, Pirelli relies above all on the greater volume of sales of these products but competition is also higher, which means that prices have to be lowered considerably and therefore profits are lower.
  • One advantage is that Pirelli operates worldwide, with a presence in many countries such as Italy, of course, but also France, Germany, Hungary, China, Japan, the United States, Australia and India. In all, the Pirelli Group operates more than 19 sites around the world. However, these extensive operations are not without their own management problems for the group.
  • Currently, the Pirelli group is also spending a lot of money on expanding its business. These higher expenses and lower margins could, in the long run, weigh heavily on the company's results and lead to a drop in its share price. This is especially true since the group is planning to implement value creation initiatives in the near future. However, these initiatives will also require a great deal of expenditure, which shareholders are increasingly concerned about in view of the company's increasingly thin cash flow.
The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

Who is the parent company of Pirelli?

Since 2015, Pirelli's parent company has been the Chinese group ChemChina, which acquired the Italian company for €7.1 billion by buying out the 26.2% stake in Pirelli held by the holding company Camfin and launching a public bid for the remaining share capital of the company through a company combining ChemChina and Camfin. Following this acquisition, the industrial tyre manufacturing business was transferred to Aesolus Tyres, another subsidiary of the Chinese group.

Does the Pirelli Group have any subsidiaries?

Obviously, in order to strategically support its own growth, the Pirelli Group has invested over the years in the acquisition and creation of several subsidiaries that still allow it to guarantee different types of activities throughout the world. The subsidiaries currently owned and operated by Pirelli are: Pirelli Tyre, Pirelli Labs S.p.A., Pirelli & C Eco Technology S.p.A. and Pirelli Ambiente S.p.A.

How to trade Pirelli shares effectively?

In order to speculate most effectively on the Pirelli share price, you need to perform different types of analysis of its price to identify the strongest trends. We strongly recommend combining technical analysis, based on the historical stock charts of this stock, with fundamental analysis, which is essentially based on the study of the publications and news that are most likely to influence the stock.

72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. This is an advert for trading CFDs on Plus500