After years of observing this company with considerable admirationâalbeit from the sidelines due to elevated valuationsâthe equity has experienced significant volatility this year. Over the trailing twelve months, the share price has declined by more than 20% YTD.
While this is not the first instance of underperformance, the returns since the 2015 IPO remain exceptional, with the stock delivering 7x returns to investors.
Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesnât constitute financial advice.
The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available
Executive Summary
About Ferrari
Ferrari represents the most exclusive automotive manufacturer globally.
The company sells the worldâs most prestigious vehicles to clients who develop a lasting devotion to the brand.
Headquartered in Italy, the company remains faithful to its heritage. All vehicles are designed and manufactured in Maranello.
A seamless fusion of sports cars, heritage, and luxury positioning, Ferrari stands as the most powerful luxury brand on the planet.
A Remarkably Stable Client Base Unmatched by Competitors
The company targets the global ultra-high-net-worth population, then concentrates all efforts on client retention.
Brand development operates through Scuderia Ferrari, the most iconic motorsports team in history. However, Formula 1 performance has been underwhelming in recent years, which may impact brand equity.
Scuderia Ferrari possesses unparalleled heritage in the automotive industryâs most relevant sport.
The team with the most fans and world championship titles, and the only one having participated in all Formula 1 seasons.
Ferrariâs Distinctive Business Model
âDifferent Ferrari for Different Ferraristiâ - The company leverages its diverse model portfolio to retain clients across their lifecycle.
A unique business architecture supports growth: 81% of new vehicles are purchased by existing clients.
The company offers limited editions to select customers. These special series are not merely objects of desire but command substantial premiums in secondary markets (Ferrari produces the only vehicles globally that retain or appreciate in value).
Critically, clients resist selling their limited editions, as doing so terminates access to future special series allocations.
Clients become captive to the brand, with many continuing to expand their collections indefinitely.
The future looks even more exclusive: more models, less units produced.
Unique Vehicles That Function as Appreciating Assets
Ferrari vehicles possess significantly longer useful lives than competing products. This fundamentally differentiates a Ferrari from a Porsche that itâs not a 911.
Today, approximately 90% of the 300,000+ units produced throughout the companyâs history remain operational according to the company.
The company delivers four vehicle categories: Range models (the majority), Special Series, Icona, and Supercarsâthe latter three designed explicitly for client retention.
In coming years, the company will launch additional models with reduced production volumes to enhance exclusivity and scarcity.
Brand Development Strategy
The company cultivates brand equity through lifestyle collections including apparel, accessories, F1 team merchandise, collectibles, and other products.
The fashion segment generates revenue from existing clients (50%) while attracting prospective Ferrari owners.
Contribution is limited, but will be part of the brand management strategy in the next decade.
This division aims to reinforce current brand positioning and expand addressable markets.
Impeccable Execution Since IPO
The company has achieved 2.3x revenue growth and 4x EBIT expansion since going public.
Revenue CAGR since IPO (2015) stands at +9.2% as of December 2024.
During this period, EPS increased approximately 6x, while the stock appreciated ~7x (implying modest multiple expansion since IPO - a key question for investors).
Shipments have multiplied by 1.8x, yet the company deliberately maintains supply below demand. No volume growth expected now.Âș
EBIT growth has been primarily driven by mix/price optimization, with volume contribution remaining secondary.
Strong Management with Aligned Incentives
Managementâs track record is exemplary, having masterfully stewarded the brand over the past decade.
The company is controlled by two majority shareholders, Exor and Piero Ferrari Trust, collectively holding approximately 50% of voting rights.
Management compensation aligns with value creation, with Free Cash Flow representing 40% of short-term bonus calculations.
All-in-all, a business like this that needs to command a premium over peers
Waiting lists average ~24 months, generating highly predictable and stable revenue streams.
The company demonstrated remarkable resilience during the Global Financial Crisis, supported by a solid and captive customer base.
Client retention combined with extended waiting lists create additional brand desirability, as only ~20% of deliveries reach new customers.
This, combined with operating margins approaching 30% and FCF margins of 15%, makes Ferrari the most profitable automotive manufacturer globally.
Is the Current Premium Justified?
The company trades at ~48x current FCF and ~33x 2030E FCF.
On a P/E basis: 40x current earnings; 30x 2030E earnings.
Management expects earnings will grow at low-double-digit rates throughout the period
Current valuation incorporates no risk premium for EV market uncertainties.
Ferrari Enters a New Chapter: The Electric Vehicle Era
This transition generates more concerns than opportunities in our assessment.
Ferrari will be the first mover, which will put them ahead of competition, but they will not be able to learn from others.
While Lamborghini and Aston Martin are delaying the introduction of the EV, Ferrari aims to be the first mover.
EVs and Hybrids: Questions Regarding Long-Term Asset Durability
By 2030, the company projects delivering 40% hybrid vehicles, 20% electric vehicles, with 40% remaining ICE (internal combustion engines).
A Ferrari has historically represented a long-duration asset with unmatched durability. The introduction of battery technologiesâwhich risk obsolescence within a decadeâpresents concerns regarding the long-term value proposition of new vehicles.
Will investments for EVs be higher than expected? As a reference, Porsche is having a hard time.
Critical questions emerge:
What will be the residual value of an electric Ferrari in 2040?
How will electric vehicles affect current demand dynamics?
Will users enjoy the new experience with artificial sound and gears?
Ferrari is not targeting volume expansion.
While this strategy aims to preserve scarcity, it raises questions about future demand trajectories.
Management will continue to manage supply and demand imbalance, creating more scarcity, and prudently penetrate the EV market.
Is this a sign of expected lower demand? or simply a scarcity strategy to drive prices up and manage the brand?
The Disappointing Capital Markets Day
Ferrari presented a conservative outlook at its Capital Markets Day in October 2025.
The company targets âŹ9.0bn revenue by 2030, implying a modest ~5% CAGR.
Positive news centered on EBIT margins expected at ~30% by 2030.
The targets appear reasonable.
Should We Question Current Forecasts?
Analysts attending the presentation questioned whether guidance was excessively conservative.
There exists potential for incremental growth, albeit limited.
Revenue CAGR can be higher at the end of the decade, but on average, it seems reasonable, as growth will come from price/mix and not volume.
EBIT margin targets are questionable. Although higher margins reflect increased limited edition sales, the transition toward sustainable manufacturing and EV production may pressure targets.
Conclusion: Is Ferrari an Investment Opportunity?
Ferrari arguably represents the worldâs premier luxury brand.
Its business model ensures earnings can compound at attractive rates given product scarcity.
However, the company enters a new phase: growth is decelerating and electric vehicles introduce meaningful uncertainty regarding industry evolution.
Slower growth does not diminish business quality.
Is current multiple a fair valuation? See conclusions at the end of the post.
Ferrari Investment Thesis
Table of Content
History of Ferrari
Business Model
Competitors and Industry Analysis
Financial Analysis
Management and Shareholders
Valuation and Conclusions
