Re-Iterating my Love of Ferrari Stock Succinctly
I love Ferrari stock, but it is has taken a 12% drop over the past three weeks. I will provide a defense of this company and its stock. I say I will do it succinctly because I am super tired, but I am foolish and do not want to lose my streak of posting every three days, which I am too tired to check, but I am pretty sure I have gotten over two or three months by now. Anyway, here is my tired and short, but still valid, defense of this company.
First, smart money is on them, and this smart money is on them pretty uniformly. Ferrari currently has 21 buys, five holds, and zero sells. That is encouraging to say the least. Analyst ratings often just mean that companies are very good at sweet talking (bribing) analysts though, so we need to dig deeper.
Their backlog is a year or two long, and these backlogged cars are all more expensive than the last due to a new feature that is boosting prices, advanced customization. If you are buying a Ferrari, you are tricking that john out. Every little touch a buyer adds creates virtually pure profit for the company. And if you’re thinking “what if they don’t trick that john out? What if they go as cheap as possible and buy a $280,000 car?” Then you would be wrong. Every Ferrari owner has dreamed of owning a Ferrari, they buy and wear Ferrari merch, and they never shut up about their Ferrari’s. You best believe that they are sparing no expense when it comes to tricking that john out.
They are recession proof. The richest people you know know people who own Ferraris, maybe. These rich fellas will not stop buying Ferraris. This is not like Louis Vuitton. Ferrari is not targeting the poor and middle-class, trying to trick them into spending more than they have on ultimately worthless, tacky products, like that ludicrously capacious bag. Ferrari is something the richest people seek out, and they will never stop seeking out the company and its products (knock on wood), even and espescially, during a recession.
The brand is unbelievably valuable, and I do not see that changing, even as someone very wary of the brand cycle. I have written countless times (probably like 15 times tbh) about the brand cycle. Where cool brands overproduce and become markedly uncool. Ferrari has been cool since the 40s. They never overproduce, seeking out higher revenues. Their underproduction maintains a truly insane level of scarcity. If I had a hunk of change sitting around, I could not get a brand-new Ferrari, even the cheapest $280,000 ones, until 2027 at the very, absolute earliest. Here’s a description of one section of the hoops you have to jump through:
“If it’s your first Ferrari There’s 2 avenues:
You have to order one of the not so desirable cars first (Portofino,Roma,GTC4 lusos), then when it arrives you have to own it for a year before Ferrari lets you have anything mid engined or V twelved.
You have a super nice relationship with your dealer meaning they sell other brands and you are a customer, and Ferrari also wants you and will sell you one of their more desirable models (BTW more desirable doesn’t mean limited production). Your SF90s , 296s, 812s…
After you got your allocation , and your deposit you’ll sign 3 things:
A promise not to butcher your car with aftermarket stuff aka misrepresentation of the brand.
Something that says that if you flip your car they won’t sell you anything else (not even a hat).
A paper that says that if you want to sell it after a while you’ll consider your dealer before any other offer. This helps both resale value and certified pre owned stock.”
In short, the company has insane leverage over their customers. They have all of the power in dealmaking.
So obviously their margins are insane.
Did I mention that they are prepped for EVs and have handled the transition perfectly up this point? Yeah, over 50% of new Ferrari owners are voluntarily picking a hybrid or fully electric car. Ferrari jumped this trend by building a brand-new factory where they can build electric Ferraris, hybrid Ferraris, and the normie Ferraris, which is already paying dividends.
They are also adding new models and lines every year, but crucially, still maintaining that exclusivity. Also, their work culture, is AWESOME, from an investor’s perspective. These guys just get it, and their boss is Benedetto Vigna, who is a literal genius. He understands every facet of the company, and I trust him wholly.
On valuations, I think this analyst Barry Schwartz, who is super high on the company, put it very well when he said “[The] valuation is not cheap, but if it were cheap it would be called Ford and you wouldn't want to own it.”
P.S. This company is freaking awesome. You should buy.
P.P.S. Please send me a Ferrari, please, please, please, please.
P.P.P.S. Well, that took a super long time because I got into rand mode, and now I am very tired.
