Technology: Known for more than just its fast cars, Ferrari is also known as a coveted luxury brand. This unusual mix has taken the company to unprecedented heights. Since its stock market debut in October 2015, Ferrari’s share price has risen by an astonishing 691%. The question now is whether Ferrari remains a worthwhile investment opportunity for today’s savvy investor.
Ferrari’s allure goes beyond horsepower – it’s based on exclusivity. The automaker’s strategy of limited production reinforces its image as a symbol of prestige and elegance. In Q3 2023 alone, only 3,383 models were sold. Ferrari has deliberately limited production to maintain its elite status. Owning a new Ferrari is not as simple as making a purchase; it involves a long waiting list, ensuring that only the most dedicated brand enthusiasts get the privilege of ownership.
Along with its unrivalled brand strength, Ferrari wields remarkable pricing power. Some of its unique models cost more than $1 million, and the brand can raise prices with confidence, easily outpacing inflation. Legendary investor Warren Buffett emphasizes that true business strength lies in pricing power, and Ferrari exemplifies this with grace and profitability.
Serving some of the world’s wealthiest individuals, Ferrari also demonstrates resilience amid economic downturns, as its clientele remains largely unaffected by economic pressures. While the brand’s prestige is unquestionable, Ferrari’s stock is no bargain. With a high price-to-earnings ratio of 50.5, it may be wise for potential investors to remain patient, waiting for a more favorable valuation.
