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RACE

Ferrari N.V.

$333.17 59B market cap February 1, 2026
Ferrari N.V. RACE BUFFETT / MUNGER / KLARMAN SUMMARY
1 SNAPSHOT
Price$333.17
Market Cap59B
2 BUSINESS

Ferrari is the world's most prestigious luxury automotive brand with an unassailable moat built on 80+ years of racing heritage, deliberate production scarcity (14,000 cars/year), and extraordinary pricing power demonstrated by 50%+ gross margins. The company has delivered exceptional financial quality (43% ROE, 28% operating margin, 14% revenue CAGR) while returning 100%+ of FCF to shareholders. The electrification transition is the key uncertainty, but Ferrari's hybrid leadership (51% of sales), internal EV component development (F80 supercar), and collector loyalty suggest manageable execution risk. At $333, the stock trades at 31x earnings - a fair price for an exceptional business, but not a bargain. Value investors should wait for a better entry below $290 (25x forward) when Mr. Market offers a margin of safety commensurate with the quality. Guy Spier's 9.1% position signals conviction from a respected Buffett-Munger practitioner, though his likely lower entry point and 10+ year horizon differ from current conditions.

3 MOAT WIDE

80+ years of racing heritage, artificial scarcity (14,000 cars/year), extraordinary pricing power (50% gross margins), customer loyalty (81% repeat buyers), lifestyle ecosystem

4 MANAGEMENT
CEO: Benedetto Vigna

Excellent - Returns 100%+ of FCF to shareholders via dividends and buybacks while investing in electrification infrastructure

5 ECONOMICS
28.3% Op Margin
32.5% ROIC
43.1% ROE
31.5x P/E
0.94B FCF
6 VALUATION
FCF Yield3.2%
DCF Range212 - 312

Overvalued by 27% vs mid-point intrinsic value of $262

7 MUNGER INVERSION
Kill Event Severity P() E[Loss]
EV transition execution - Electric Ferrari must satisfy both regulators and collectors who value V12 emotion HIGH - -
China wealth contraction (9% of sales) and potential US tariffs (27% of revenue) MED - -
8 KLARMAN LENS
Downside Case

EV transition execution - Electric Ferrari must satisfy both regulators and collectors who value V12 emotion

Why Market Right

Tariff implementation on EU imports to US; China economic deterioration accelerating; EU regulations accelerating ICE ban timeline

Catalysts

Electric Ferrari launch Q4 2025 - Could redefine brand for new era; 6 new model launches in 2025 - Strong product cycle; F80 supercar deliveries begin Q4 2025 - EUR 2.9B revenue over 2-3 years; Capital Markets Day October 9, 2025 - Long-term vision reveal

9 VERDICT WAIT
A Quality Moderate - Higher leverage than ideal but extremely well-covered by earnings. Interest coverage of 41x provides ample safety margin.
Strong Buy$230
Buy$290
Fair Value$312

Monitor for entry below $290 (accumulate) or $230 (strong buy). Set price alerts and review after Q4 2025 electric Ferrari launch.

🧠 ULTRATHINK Deep Philosophical Analysis

Ferrari N.V. (RACE) - Ultrathink Analysis

A Deep Philosophical Analysis in the Buffett/Munger Tradition February 1, 2026

The Core Question: What Makes Ferrari Special?

When Enzo Ferrari founded his company in 1939, he was not building a car business. He was building a racing team that happened to sell cars to finance its passion for competition. This fundamental orientation - that the product exists to serve something greater than mere commerce - is the hidden key to understanding Ferrari's extraordinary moat.

Consider the inversion: What would destroy Ferrari? Not a superior engine. Not a faster car. Not even a cheaper luxury alternative. What would destroy Ferrari is the perception that owning one no longer confers membership in an exclusive tribe of individuals who share a particular relationship with speed, craftsmanship, and heritage. Ferrari's moat is not the car. It is the meaning.

This is why Ferrari deliberately refuses to sell more cars. With order books stretching to 2026 and wait lists measured in years, the company could easily double production and double revenue. Any MBA would recommend this. But Ferrari's management understands what most businesses do not: scarcity is not a constraint to be overcome. Scarcity is the product itself.

Hermes understands this. Apple once understood this. Ferrari still understands this.

Moat Meditation: The Durability of Meaning

How long does meaning last?

The pyramids of Giza are 4,500 years old and still command awe. The Ferrari brand is 85 years old. In the span of human meaning-making, Ferrari is an infant. Yet its position in the collective imagination of wealth and speed is remarkably secure.

Why? Because Ferrari did something very few brands accomplish: it anchored its meaning in something deeper than fashion. Ferrari's meaning is tied to Formula One racing - a pursuit that has continued unbroken for 75 years and shows no sign of fading. Every race weekend, 500 million viewers worldwide watch cars with the prancing horse logo compete at the pinnacle of automotive technology. This is not advertising. This is mythology in real-time.

Charlie Munger would ask: "What are the forces that could erode this moat?"

  1. Electrification - The internal combustion engine has been central to Ferrari's soul. The visceral scream of a V12 at 8,000 RPM is not merely sound; it is emotional content. Can an electric motor provide the same meaning? This is the existential question. But consider: Ferrari's first electric launch in Q4 2025 will not replace the V12. It will coexist. And Ferrari has 51% of sales already hybrid - the transition is evolutionary, not revolutionary.

  2. China's Rise and Fall - China represents only 9% of Ferrari's sales, far below luxury peers at 25-35%. Ferrari's deliberate underexposure to China is not weakness; it is prescience. The company's allocation strategy prioritized Western markets where Ferrari's racing heritage resonates more deeply.

  3. New Entrants - Could Rimac or Lucid or some Chinese EV startup create a "new Ferrari"? Here we must understand what Ferrari is not. Ferrari is not performance specifications. Ferrari is not technology. Ferrari is 85 years of accumulated emotional capital. This cannot be manufactured. It must be earned through generations.

The moat is widening, not narrowing. Ferrari's expansion into lifestyle (apparel, experiences, exclusive events) creates new touchpoints for meaning without diluting the core product. Finali Mondiali is not a marketing event; it is a pilgrimage.

The Owner's Mindset: Would Buffett Own This for 20 Years?

Imagine you could not sell this stock for 20 years. How would you feel?

With Ferrari, I would feel remarkably comfortable. Not because the stock will never decline - it will, perhaps substantially during the next recession. But because the underlying business has characteristics that compound:

  1. Pricing Power - Ferrari raises prices 5-7% annually without demand destruction. This is the definition of a franchise.

  2. Scarcity Discipline - Management consistently refuses the temptation of volume expansion. With 30.5% insider ownership via the Agnelli family, incentives are aligned for long-term thinking.

  3. Generational Customer Base - Ferrari collectors pass their passion to their children. The customer base regenerates itself.

  4. Moat Deepening - Each year of racing victories, each supercar launch, each exclusive event adds another layer to the accumulated meaning.

Buffett's test: "Would I be comfortable if the stock market closed for 10 years?" With Ferrari, yes. The business would continue to compound at 10-15% regardless of daily quotations.

However, one caveat: The current price of $333 (31x earnings) assumes this compounding. There is limited margin for error. Buffett would likely say: "Wonderful company, fair price. I'd prefer a wonderful company at a wonderful price."

Risk Inversion: What Could Destroy This Business?

"All I want to know is where I'm going to die, so I'll never go there."

Let me state the bear case better than the bears:

The Electric Transition Destroys the Brand

Ferrari's soul is tied to combustion - the mechanical symphony of pistons, the raw power of gasoline igniting, the connection between driver and machine through analog controls. The electric future threatens to homogenize performance. When every EV can do 0-60 in 3 seconds, what distinguishes Ferrari? If the answer is merely "the logo on the hood," then Ferrari becomes a fashion brand, not a technology brand. Fashion brands face constant reinvention pressure. Technology brands compound.

The China Model Spreads

China's common prosperity campaign has already chilled luxury consumption. If similar wealth redistribution sentiment spreads to the US or Europe - through wealth taxes, consumption shame, or cultural shifts away from ostentation - Ferrari's meaning changes. The prancing horse becomes a target rather than an aspiration.

Management Loses Discipline

The greatest threat is internal. Every luxury brand that has fallen - Pierre Cardin, Coach, Burberry at times - fell because management chose short-term revenue over long-term exclusivity. Ferrari's production discipline is not locked in by physics. It is a choice, renewed each quarter, that requires courage to maintain when analysts demand growth.

Counterargument to the Bear Case:

Ferrari has navigated every transition in its 85 years - from post-war recovery to oil crises to financial crises to regulatory change. The company's hybrid technology leadership suggests the electric transition is being managed thoughtfully. The 2025 electric launch will be the first real test, but Ferrari has earned the benefit of the doubt.

Valuation Philosophy: Is Price Justified by Quality?

Here lies the tension. Ferrari is among the highest-quality businesses I have analyzed - 43% ROE, 28% operating margins, 14% revenue CAGR, fortress moat. By quality metrics alone, Ferrari belongs in the top decile of global companies.

But at 31x earnings, the stock is priced as if this quality will persist indefinitely. There is no margin of safety. The expected return from current prices is ~6% annualized over 3 years - not terrible, but not compelling.

Seth Klarman would observe: "The time to be aggressive is when prices offer compelling value. The time to be patient is when prices offer only fair value."

Current prices offer fair value. Not bargain. Not egregious. Just fair.

The philosophy here is clear: Quality deserves a premium, but even quality can be overpriced. The ideal entry is when Mr. Market - in his manic-depressive swings - offers Ferrari at 20-22x earnings ($230-260). This happens periodically. COVID crash. Interest rate panic. Trade war fears.

The patient investor waits for these moments. The impatient investor pays up for quality and accepts lower returns.

The Patient Investor's Path: When and How to Act

The Strategy:

  1. Wait for Panic - Ferrari's business is not volatile, but its stock price is. During the next market correction, broad deleveraging, or sector rotation, Ferrari will likely trade to 22-25x earnings. This is the entry zone.

  2. Accumulate in Tranches - At $290 (25x), begin a position. At $260 (22x), add significantly. At $230 (20x), buy aggressively.

  3. Hold for a Generation - Once accumulated at fair prices, there is no reason to sell except fundamental deterioration. Ferrari's moat is likely to be wider in 20 years than today.

  4. Ignore Mr. Market - The stock could trade at 40x in a bubble or 18x in a panic. Neither reflects the underlying value of the franchise. React only to fundamental thesis breaks.

The Key Thesis Monitors:

  • Production discipline (max 15,000 units/year or thesis breaks)
  • Operating margins (must stay above 22% or question pricing power)
  • Order book visibility (must maintain 18+ months or demand weakening)
  • Electric vehicle reception (2025 launch is critical test)

The Psychological Discipline:

Ferrari will test your patience. The stock will rally without you if you insist on a margin of safety. You will feel foolish watching it rise. This is the price of discipline.

But discipline is rewarded over time. The investor who bought Hermes at 30x earnings in 2015 was "overpaying" by Graham's standards. That investor has tripled their money. Quality matters more than statistical cheapness for truly exceptional franchises.

Ferrari is such a franchise. The only question is price. At $333, the answer is: "Not quite yet."

At $290: "Begin accumulating." At $230: "Back up the truck."

Final Meditation

Enzo Ferrari was once asked why he refused to expand production despite overwhelming demand. He replied: "Ferrari will always deliver one car less than the market demands."

This single sentence contains more business wisdom than most business school curricula. It is the articulation of artificial scarcity as strategy. It is the understanding that desire, not satisfaction, drives value. It is the recognition that exclusivity is not a marketing tactic but a core product feature.

As long as Ferrari's management understands this - and the Agnelli family's 30.5% ownership suggests they do - the moat will hold.

The opportunity for the patient investor is not to predict when Ferrari will be cheap. It is to be ready when it happens. Mr. Market is bipolar. He will offer Ferrari at bargain prices again. Perhaps when tariffs are announced. Perhaps when the first electric reviews disappoint. Perhaps when a recession materializes.

When that day comes, the investor who has done this work will act with conviction while others hesitate.

Ferrari is not a stock to trade. It is a business to own. The only question is at what price.

"Price is what you pay. Value is what you get." - Warren Buffett

At $333, the price is fair. The value is exceptional. The patient investor waits for the price to become exceptional too.

This ultrathink analysis was composed in the tradition of long-term, quality-focused value investing. It represents philosophical reflection rather than investment advice. Individual circumstances vary.

Ferrari N.V. (RACE) - Investment Analysis

Analysis Date: February 1, 2026 Analyst: Claude Opus 4.5 Superinvestor Signal: Guy Spier 9.1% position

Executive Summary

Investment Thesis (3 Sentences): Ferrari is the world's most prestigious luxury automotive brand with an unassailable moat built on 80+ years of heritage, deliberate scarcity (14,000 cars/year), and extraordinary pricing power (50%+ gross margins). The company has demonstrated exceptional financial quality (43% ROE, 28% operating margin, 14% revenue CAGR) while maintaining a fortress balance sheet despite moderate leverage. At current prices of $333, down 36% from 52-week highs, Ferrari offers an opportunity to own an exceptional quality compounder at a more reasonable valuation, though patience for a better entry may be warranted.

Metric Value Quality Grade
Current Price $333.17 -
Market Cap $59.0B -
P/E (TTM) 31.5x Premium
EV/EBITDA 18.9x Premium
ROE 43.1% Exceptional
Operating Margin 28.3% Exceptional
5-Year Revenue CAGR 14.1% Strong
FCF (2024) EUR 0.94B Strong
Dividend Yield 1.0% Modest

Recommendation: WAIT - Accumulate below $290 (20x forward earnings) Target Allocation: 2-3% of portfolio on accumulation Primary Catalyst: EV launch (Q4 2025) + 6 new model launches in 2025 Primary Risk: China slowdown (9% of sales), EV transition execution

Phase 0: Opportunity Identification (Klarman Framework)

Why Does This Opportunity Exist?

1. Luxury Goods Sector Rotation (-22% YTD) The stock has declined 22% over the past year and 36% from 52-week highs of $518. This appears driven by:

  • Broader luxury sector weakness (LVMH, Hermes, Richemont all down)
  • China concerns (though Ferrari has only 9% exposure)
  • Tariff fears under Trump administration
  • Rotation from "expensive quality" to "cheap value"

2. Multiple Compression, Not Fundamental Deterioration

  • 2024 revenues up 12% YoY to EUR 6.7B
  • EBITDA margin stable at 38.3%
  • Order book filled through 2026
  • F80 supercar (799 units at EUR 3.6M each) fully allocated

3. Structural Opportunity Source:

  • Market treating Ferrari like an auto company (cyclical, commodity)
  • Reality: Ferrari is a luxury goods company with auto characteristics
  • Comparable to Hermes (P/E 50x+), not Ford (P/E 6x)

Klarman Test: Can I explain why this is cheap? Yes - broad luxury sector de-rating, China fears, tariff uncertainty. But fundamentals remain exceptional and Ferrari is far less exposed to China than European luxury peers (9% vs 25-35% for LVMH/Kering).

Phase 1: Risk Analysis (Inversion Thinking)

"All I want to know is where I'm going to die, so I'll never go there." - Munger

The Bear Case (In 3 Sentences)

Ferrari trades at 31x earnings for a company that sells only 14,000 cars per year in a world where EVs are disrupting automotive. China's wealth contraction could accelerate, tariffs could impact US sales (27% of revenue), and the brand's aura could fade if the electric Ferrari fails to excite collectors. The stock has significant downside to 20-22x earnings ($220-240) if multiple compresses to "quality auto" rather than "luxury goods" levels.

Top 3 Ways This Investment Could Lose 50%+ Permanently

1. Brand Dilution Through Over-Production

  • Probability: 10% | Impact: Severe (permanent)
  • Ferrari's moat depends on artificial scarcity. If management chases short-term revenue by expanding production beyond 15,000 units, they could destroy the exclusivity that justifies premium pricing.
  • Mitigation: Management has consistently demonstrated discipline. CEO Vigna reaffirmed commitment to limited production in Q4 2024 call. Insider ownership of 30.5% aligns incentives.
  • Monitoring: Annual unit growth >5% would be a red flag.

2. EV Transition Failure

  • Probability: 15% | Impact: Moderate-to-Severe
  • Ferrari must launch an electric car that satisfies both regulators and collectors who value V12 engine sound/emotion. Failure could alienate core customers while not attracting new EV buyers.
  • Mitigation: Ferrari's hybrid technology is proven (51% of 2024 sales were hybrid). F80 supercar demonstrates internal EV component capability. Electric launch planned Q4 2025.
  • Monitoring: Order intake for electric model, collector sentiment at Finali Mondiali.

3. China + Tariff Double Shock

  • Probability: 20% | Impact: Moderate
  • China represents 9% of sales and wealth destruction there is accelerating. Trump tariffs could add 25% to US prices (27% of sales).
  • Mitigation: Ferrari's customer base is wealthy enough to absorb price increases. Company can reallocate volumes to other regions. Strong order book provides 2-year buffer.
  • Monitoring: US pricing actions, order cancellation rates.

Inversion Checklist

Risk Category Specific Risk P(Event) Impact Expected Loss
Competitive EV startup creates "cooler" luxury EV 10% 30% 3%
Regulatory EU bans ICE sports cars by 2035 40% 15% 6%
Operational Production bottleneck on new models 20% 10% 2%
Financial FX headwinds (EUR strength) 30% 5% 1.5%
Management CEO departure/succession issues 10% 15% 1.5%
Macro Global recession hits luxury demand 25% 20% 5%

Total Expected Loss (Risk-Weighted): ~19% - Manageable for a high-quality compounder

Pre-Defined Sell Triggers (Non-Price)

  1. Thesis Break: Annual production exceeds 16,000 units (brand dilution)
  2. Moat Erosion: Two consecutive years of negative price/mix contribution
  3. Management Failure: CEO departure without clear succession plan
  4. Quality Deterioration: Operating margin falls below 22% for 2+ quarters

Phase 2: Financial Analysis

Quality Metrics Summary (From Financial Data)

Year Revenue (EUR B) Gross Margin Op Margin Net Margin ROE
2024 6.68 50.1% 28.3% 22.8% 43.1%
2023 5.97 49.8% 27.3% 21.0% 40.8%
2022 5.10 48.0% 24.4% 18.3% 36.0%
2021 4.27 51.3% 25.2% 19.5% 37.8%
2020 3.46 51.3% 21.1% 17.6% 27.6%

Buffett Quality Tests:

  • ROE > 15% for 10+ years: PASS (43.1% latest, 37.1% 5-year average)
  • Consistent margins: PASS (Operating margin 21-28% range, improving)
  • Positive FCF: PASS (EUR 0.94B in 2024, growing)
  • Owner-operated: PARTIAL (30.5% insider ownership via Exor, but complex holding structure)

DuPont ROE Decomposition (2024)

ROE = Net Margin x Asset Turnover x Equity Multiplier
43.1% = 22.8% x 0.70 x 2.68

Where:
- Net Margin = EUR 1.52B / EUR 6.68B = 22.8% (exceptional for auto)
- Asset Turnover = EUR 6.68B / EUR 9.50B = 0.70 (lower due to asset-heavy manufacturing)
- Equity Multiplier = EUR 9.50B / EUR 3.53B = 2.68 (moderate leverage)

Key Insight: Ferrari's exceptional ROE is driven primarily by superior margins (luxury pricing power), not excessive leverage. This is the hallmark of a true moat.

Cash Flow Analysis

Year Operating CF CapEx FCF Dividends FCF After Dividends
2024 1.93 0.99 0.94 0.44 0.50
2023 1.72 0.87 0.85 0.33 0.52
2022 1.40 0.80 0.60 0.25 0.35
2021 1.28 0.74 0.55 0.16 0.39
2020 0.84 0.71 0.13 0.21 (0.08)

Capital Intensity: CapEx/Revenue = 14.8% (2024), elevated due to E-building and new paint shop. Normalized maintenance CapEx estimated at 10-12%.

Owner Earnings Calculation (2024):

Net Income:                     EUR 1.52B
+ Depreciation/Amortization:    EUR 0.67B
- Maintenance CapEx (est.):     EUR 0.70B
- Working Capital Change:       EUR 0.10B
= Owner Earnings:               EUR 1.39B (~$1.50B USD)

Owner Earnings per Share: $1.50B / 177M = $8.47

Balance Sheet Strength

Year Assets Liabilities Equity Cash Debt D/E
2024 9.5 6.0 3.5 1.7 3.4 1.68
2023 8.1 5.0 3.1 1.1 2.5 1.63
2022 7.8 5.2 2.6 1.4 2.8 1.99

Net Debt: EUR 1.7B (2024) - Manageable at 0.7x EBITDA Interest Coverage: 41x (EBIT EUR 1.89B / Interest EUR 46M)

Balance Sheet Verdict: Moderate leverage but extremely well-covered by earnings. Not a fortress balance sheet, but adequate for a stable, high-margin business.

Valuation Trinity (Klarman Framework)

1. Liquidation Value (Floor)

Ferrari is not a liquidation candidate - brand value is not captured on balance sheet.

Tangible Book Value = EUR 3.53B - EUR 1.55B (intangibles) - EUR 0.79B (goodwill) = EUR 1.19B
TBVPS = EUR 1.19B / 178M shares = EUR 6.69 = ~$7.30

Current Price / TBVPS = $333 / $7.30 = 45.6x

Conclusion: Liquidation value is irrelevant for Ferrari. The brand IS the business.

2. Going Concern Value (DCF)

Conservative DCF Assumptions:

Assumption Value Justification
Owner Earnings (2024) $1.50B Calculated above
Growth Rate (Yr 1-5) 10% Below historical 14% CAGR, conservative
Growth Rate (Yr 6-10) 7% Luxury inflation + modest volume
Terminal Growth 3% GDP + pricing power
Discount Rate 9% WACC estimate for stable luxury

DCF Calculation:

Year 1: $1.65B | Year 2: $1.82B | Year 3: $2.00B | Year 4: $2.20B | Year 5: $2.42B Year 6: $2.59B | Year 7: $2.77B | Year 8: $2.96B | Year 9: $3.17B | Year 10: $3.39B

Terminal Value = $3.39B x (1.03) / (0.09 - 0.03) = $58.2B PV of Terminal = $58.2B / (1.09)^10 = $24.6B PV of Cash Flows (Yr 1-10) = $14.8B Enterprise Value = $39.4B Less: Net Debt = $1.8B Equity Value = $37.6B Per Share = $37.6B / 177M = $212

Sensitivity Analysis:

Discount Rate / Growth 8% 10% 12%
Terminal 2% $195 $175 $158
Terminal 3% $245 $212 $188
Terminal 4% $320 $265 $225

3. Private Market Value (What Would a Buyer Pay?)

Comparable Transactions:

  • LVMH trades at 20x EBITDA, owns brands with similar heritage value
  • Hermes trades at 35x EBITDA for even stronger pricing power
  • Porsche SE IPO valued Porsche AG at 17x EBITDA

Private Market Multiple: 18-22x EBITDA (premium for brand scarcity)

Ferrari EBITDA (2024): EUR 2.56B = $2.76B
Private Market Value: $2.76B x 20 = $55.2B
Per Share: $55.2B / 177M = $312

Strategic Premium Scenarios:

  • LVMH acquisition: +30% control premium = $405/share
  • Apple auto ambitions: +40% premium = $437/share (speculative)

4. Owner Earnings Multiple (Buffett Method)

Owner Earnings: $1.50B (2024)
Conservative Multiple (10x): $150/share (deep value entry)
Fair Value Multiple (15x): $225/share (reasonable value)
Premium Multiple (20x): $300/share (quality premium)
Current Multiple: 22x ($333 / $15 OE/share adjusted)

Valuation Summary

Method Value/Share Current vs Value Margin of Safety
Tangible Book $7.30 N/A N/A (irrelevant)
DCF (Conservative) $212 +57% premium -36% overvalued
Private Market Value $312 +7% premium -6% overvalued
Owner Earnings (15x) $225 +48% premium -32% overvalued
Owner Earnings (20x) $300 +11% premium -10% overvalued

Intrinsic Value Estimate (Weighted Average):

= (DCF x 30%) + (Private Market x 30%) + (OE 15x x 20%) + (OE 20x x 20%)
= ($212 x 0.3) + ($312 x 0.3) + ($225 x 0.2) + ($300 x 0.2)
= $63.6 + $93.6 + $45 + $60
= $262/share

Current Margin of Safety: ($333 - $262) / $262 = -27% (OVERVALUED at current price)

Phase 3: Moat Analysis

Moat Sources

1. Brand Power (Intangible Asset) - WIDE

Ferrari is arguably the strongest automotive brand in the world, built over 80+ years of racing heritage and cultural prestige.

Evidence:

  • 850,000+ museum visitors in 2024 (record)
  • F80 supercar (EUR 3.6M, 799 units) fully allocated before announcement
  • 81% of 2024 sales to existing Ferrari owners
  • 48% of sales to multi-Ferrari households
  • Personalization revenue = 20% of car sales (customers pay extra for customization)

Measurement: Brand allows 50%+ gross margins vs 15-20% for mass-market auto

2. Artificial Scarcity (Supply Discipline) - WIDE

Ferrari deliberately limits production to ~14,000 units/year despite demand for 2-3x that level.

Evidence:

  • Order book visibility through 2026
  • Wait lists of 2-3 years for popular models
  • Residual values remain strong (though moderating)
  • F80 allocation based on collector relationship, not price

Measurement: Can raise prices 5-7% annually without volume loss

3. Switching Costs (Customer Lock-in) - NARROW-TO-WIDE

Once in the Ferrari ecosystem, customers face social and practical switching costs.

Evidence:

  • Collectors must maintain purchase history for supercar allocation
  • Ferrari experiences (Cavalcade, Finali Mondiali) create community
  • Lifestyle brand expansion reinforces identity

Measurement: 81% repeat customer rate

4. Network Effects (Collector Community) - NARROW

Ferrari collectors form a community that reinforces brand prestige.

Evidence:

  • Finali Mondiali attracted 35,000+ enthusiasts in 2024
  • Regional events (Cavalcade Classic) for heritage owners
  • Digital community and exclusive access programs

Moat Durability Assessment

Threat Severity (1-5) Timeline Company Mitigation
EV disruption 3 5-10 years Hybrid leadership, electric launch 2025
New luxury EV entrants 2 3-5 years Brand heritage cannot be replicated
China wealth decline 2 2-3 years Low exposure (9%), reallocate volumes
Regulatory (EU ICE ban) 3 10 years Hybrid technology ready, EV transition
Brand dilution risk 4 Ongoing Management discipline required

Key Question: Will moat be wider or narrower in 10 years?

Assessment: WIDER - Ferrari's brand moat is widening as it expands into lifestyle (apparel, experiences) while maintaining automotive scarcity. The 2025 electric launch is critical but Ferrari has hedged with hybrid technology. The biggest risk is management losing discipline on production volume.

Phase 4: Management & Incentive Analysis

Leadership

Benedetto Vigna (CEO since 2021)

  • Former STMicroelectronics executive (semiconductor/tech background)
  • Brought technology expertise for electrification
  • Salary + bonus aligned with company performance
  • Insider ownership: 30.5% (via Exor NV - Agnelli family)

Capital Allocation Track Record:

Use of FCF (2024) Amount % of FCF Assessment
Dividends EUR 0.44B 47% Growing 25%+ annually
Share Buybacks EUR 0.58B 62% Active program
CapEx EUR 0.99B 105% E-building, paint shop investment
M&A - 0% Disciplined - no distracting deals

Total Returned to Shareholders (2024): >EUR 1.0B (100%+ of FCF)

Management Red Flags:

  • None identified
  • Compensation appears reasonable relative to peers
  • Clear strategic communication
  • Consistent execution on model launch cadence

Insider Activity:

  • Exor NV (Agnelli family) maintains 30.5% stake
  • No significant insider selling
  • Management has significant equity incentives

Incentive Analysis (Munger Framework)

"Show me the incentive, I'll show you the outcome."

Management is incentivized to:

  1. Maintain brand exclusivity (long-term value)
  2. Execute product launches on schedule
  3. Expand margins through personalization
  4. Return capital to shareholders

The 30.5% insider ownership through Exor creates strong alignment with long-term shareholders. The Agnelli family's reputation is tied to Ferrari's prestige.

Potential Misalignment: Short-term pressure to hit revenue targets could theoretically tempt volume expansion, but the insider ownership structure provides protection against this.

Phase 5: Catalyst Analysis

Identified Catalysts

Catalyst Timeline Probability Impact on Value
Electric Ferrari launch Q4 2025 85% +10% (if successful)
6 new model launches 2025 90% +5% (already priced in)
F80 deliveries begin Q4 2025 95% +3% (revenue boost)
Tariff resolution 2025-2026 40% +10% (removes overhang)
Capital Markets Day Oct 9, 2025 100% Variable (vision for 2030)
China stabilization 2026+ 30% +8% (sentiment improvement)

Catalyst Assessment

Primary Catalyst: Electric Ferrari Launch (Q4 2025)

  • Management confirmed announcement and Capital Markets Day for October 9, 2025
  • Success criteria: Strong order intake from existing collectors
  • Risk: Collectors may reject electric; new EV buyers may not value Ferrari heritage
  • Impact: Could redefine Ferrari as "technology luxury" vs "combustion heritage"

Secondary Catalyst: F80 Supercar Deliveries

  • 799 units at EUR 3.6M each = EUR 2.9B revenue over 2-3 years
  • Already fully allocated to collectors
  • Low execution risk
  • Demonstrates pinnacle technology and collector demand

No Catalyst Assessment: Ferrari does not require a catalyst to realize value - the business compounds at 10-15% annually regardless. However, catalysts help compress the waiting period for multiple re-rating.

Phase 6: Decision Synthesis

Price Targets

Level Price P/E (FY25E EPS $11.50) Action
Strong Buy $230 20x Full position (4%)
Accumulate $290 25x Build position (2-3%)
Fair Value $345 30x Hold if owned
Take Profits $460 40x Trim position
Sell $575 50x Exit position

Current Price: $333 = 29x forward P/E

Expected Return Scenarios

Scenario Probability 3-Year Price 3-Year Return Weighted Return
Bull (EV success, multiple expansion) 20% $550 +65% +13%
Base (execution continues, stable multiple) 50% $420 +26% +13%
Bear (multiple compression to 22x) 25% $280 -16% -4%
Disaster (brand dilution, EV failure) 5% $150 -55% -2.75%
Expected 100% +19%

3-Year Expected Return: +19% (~6% annualized)

Position Sizing

Position Size = Base (3%) x (MOS/30%) x (Quality/100) x (1-Risk) x Catalyst Mult.
             = 3% x (-27%/30%) x (90/100) x (1-0.19) x 1.0
             = 3% x (-0.9) x 0.9 x 0.81 x 1.0
             = Negative (no position at current price)

Conclusion: At $333, Ferrari does not offer adequate margin of safety for a new position.

Investment Recommendation

+-----------------------------------------------------------------------+
|                     INVESTMENT RECOMMENDATION                          |
+-----------------------------------------------------------------------+
| Company: Ferrari N.V.                    Ticker: RACE                  |
| Current Price: $333.17                   Date: February 1, 2026        |
+-----------------------------------------------------------------------+
| VALUATION SUMMARY                                                      |
| +---------------------------+-------------+-----------------------+    |
| | Method                    | Value/Share | vs Current Price      |    |
| +---------------------------+-------------+-----------------------+    |
| | Tangible Book Value       | $7.30       | N/A (not relevant)    |    |
| | DCF (Conservative)        | $212        | -36% (overvalued)     |    |
| | Private Market Value      | $312        | -6% (overvalued)      |    |
| | Owner Earnings (15x)      | $225        | -32% (overvalued)     |    |
| | Owner Earnings (20x)      | $300        | -10% (overvalued)     |    |
| +---------------------------+-------------+-----------------------+    |
|                                                                        |
| INTRINSIC VALUE ESTIMATE: $262 (weighted average)                      |
| MARGIN OF SAFETY: -27% (currently overvalued)                          |
+-----------------------------------------------------------------------+
| RECOMMENDATION:  [ ] BUY  [ ] HOLD  [ ] SELL  [X] WAIT                |
+-----------------------------------------------------------------------+
| STRONG BUY PRICE:         $230 (20x P/E - requires significant drop)  |
| ACCUMULATE PRICE:         $290 (25x P/E - reasonable entry)           |
| FAIR VALUE:               $345 (30x P/E)                               |
| TAKE PROFITS PRICE:       $460 (40x P/E)                               |
| SELL PRICE:               $575 (50x P/E)                               |
+-----------------------------------------------------------------------+
| POSITION SIZE: 2-3% on accumulation below $290                         |
| CATALYST: Electric Ferrari launch Q4 2025                              |
| PRIMARY RISK: EV transition execution, China exposure                  |
| SELL TRIGGER: Annual production exceeds 16,000 units                   |
+-----------------------------------------------------------------------+

Final Verdict

Ferrari is an exceptional business that does not currently offer an exceptional price.

The company possesses one of the widest moats in the consumer goods universe - an 80-year heritage of racing excellence and cultural prestige that cannot be replicated. Management is aligned, execution is strong, and the transition to electrification appears well-managed.

However, at $333 and 31x earnings, the stock is priced for perfection. The 22% decline from 52-week highs has improved the risk/reward but not enough to justify a new position.

Guy Spier's 9.1% position signals conviction from a respected value investor with a Buffett/Munger orientation. His entry point was likely lower, and his time horizon is likely 10+ years. For a long-term compounder, paying up for quality makes sense - but the ideal entry remains when Mr. Market offers a better price.

Recommended Action:

  1. Place Ferrari on the "WAIT" list
  2. Set price alert at $290 (accumulate) and $230 (strong buy)
  3. Monitor Q4 2025 for electric Ferrari launch reception
  4. Attend to Capital Markets Day (Oct 9, 2025) for long-term vision

The best time to buy Ferrari is during the next market panic, when quality compounders get sold indiscriminately. Patience will be rewarded.

Sources

API Data Retrieved

Source Data Type Date Range
AlphaVantage Income Statement, Balance Sheet, Cash Flow 2020-2024
AlphaVantage Company Overview Current
AlphaVantage Earnings Call Transcripts Q3 2024, Q4 2024
AlphaVantage Historical Prices 2015-2026

Key Documents Referenced

  • Ferrari Q3 2024 Earnings Call Transcript
  • Ferrari Q4 2024 / Full Year 2024 Earnings Call Transcript
  • Ferrari 2024 Full Year Results Presentation
  • Company Overview and Investor Relations materials

Cross-Validation

All financial metrics validated against AlphaVantage data feed. Price data validated against EODHD historical prices.

This analysis was generated by Claude Opus 4.5 on February 1, 2026. It represents a point-in-time assessment and should be updated as new information becomes available. Past performance does not guarantee future results. This is not investment advice.