The Ferrari Case

Ferrari N.V. (RACE) delivers elite business performance and strong long-term stock returns, but current valuations are steep. 📊 Financial & Business Strengths • Scarcity Model: Production caps protect pricing power. • Luxury Margins: Financials mirror high-end luxury, not automakers. • Order Visibility: Backlogs extend firmly through 2026 and 2027. • Long-Term Gains: Shares have nearly doubled over five years. • Rich Multiples: Trades at a high forward P/E over 30x. • Limited Upside: High valuations price in near-term perfection. • Recent Cooling: Shares sit below 52-week highs amid cautious sentiment. 💡 Strategic Overview Metric / Attribute Ferrari N.V. (RACE) Profile Market Position Elite performance luxury goods maker Consensus View Mixed/Hold to selective Buy Valuation Concern Expensive relative to near-term growth • Your target holding period (short-term vs. multi-year) • Your risk tolerance for high-multiple luxury equities I can help map out a suitable entry strategy. AI responses may include mistakes. For financial advice, consult a professional. Learn more • Simply Wall Street Ferrari (NYSE:RACE) - Stock Analysis Ferrari: Luxury Cars Crash, Too (Rating Downgrade) Summary Ferrari N.V. remains a world-class luxury brand, but the current valuat... • Yahoo Finance Ferrari (BIT:RACE) Stock Could Be Overvalued Despite Its 98 ... Ferrari (BIT:RACE) Stock Could Be Overvalued Despite Its 98% Run. Bailey Pemberton. July 30, 2026 3 MINUTES_READ. RACE · RACE · Ex... • Yahoo Finance Is Ferrari N.V. (RACE) A Good Stock To Buy Now? The company deliberately restricts production below market demand, creating a durable scarcity moat that supports exceptional pric... Ferrari's core financial and business performance remains elite, though its short-term stock price has experienced a classic valuation correction in recent months. To explain how Ferrari N.V. (RACE) is performing under the hood, it helps to separate the underlying business engine from the stock market dynamics. 🏎️ The Business Engine: Exceptional Growth & Margins Ferrari is performing more like a ultra-luxury fashion house (such as Hermès) than an automotive company. • Record Revenues: The business is growing strongly. In the second quarter of 2026, revenue hit €1.94 billion (up 8.4% year-over-year) and net income climbed 9.1% to €463 million. • Raised Guidance: Because of strong demand, Ferrari raised its full-year 2026 revenue guidance to €7.60 billion. • Industry-Leading Margins: The company maintains an EBITDA margin targeting 39%, which is unheard of in the traditional auto sector. • Recession-Resistant Demand: Ferrari's order backlog stretches into late 2027. Even during global luxury slowdowns, its ultra-wealthy client base keeps inquiries rising. 📉 The Stock Performance: A Mid-2026 Cooling While the business metrics are practically flawless, the stock performance tells a more nuanced story of high expectations. Ferrari NV (RACE) US$ 389.14 4.64% since 2 Jan 2026 • The Multi-Year Surge: Zooming out, the long-term performance is incredible. The stock has delivered a ~107% return over the past 5 years, nearly doubling shareholders' money. • The 2026 Pullback: After surging to an all-time high over $500 in 2025 and hitting a 2026 summer peak of $424.44 in August, the stock has cooled down to around $389 as of October 2026. • The Valuation Reality: Wall Street firms like UBS and Morgan Stanley recently trimmed their price targets slightly (to $450 and $456, respectively). This isn't because the business is failing, but because the stock became statistically overvalued after its massive run. At a Price-to-Earnings (P/E) ratio sitting near 37, the market has already priced in near-perfect execution for the next few years. 🛠️ Capital Support Mechanisms To protect the stock's value during market swings, Ferrari runs a massive €3.5 billion multi-year share buyback program. By aggressively buying back its own shares (€57.5 million repurchased in September 2026 alone), Ferrari artificially reduces share supply, boosting its earnings-per-share metrics even when the market is choppy.

Ferrari stock performance has been outstanding in the last year or so - it has grown like a proper luxury goods company rather than an automaker. Its sales are very good and are well booked into the future. It has had a multi year surge: The stock has delivered a ~107% return over the past 5 years, nearly doubling shareholders' money. At a Price-to-Earnings (P/E) ratio sitting near 37, the market has already priced in near-perfect execution for the next few years. To protect the stock's value during market swings, Ferrari runs a massive €3.5 billion multi-year share buyback program. By aggressively buying back its own shares (€57.5 million repurchased in September 2026 alone), Ferrari artificially reduces share supply, boosting its earnings-per-share metrics even when the market is choppy. Ferrari’s latest results support the luxury-company argument: revenue and profit rose even as it delivered fewer cars. The key uncertainty is how much growth investors are paying for. Buybacks help earnings per share, but they cannot guarantee the share price or make an expensive purchase good value. The data also changes the recent-performance picture: the US shares closed at about $386.50 on 6 October, roughly 21% below a year earlier. And the €57.5 million buyback figure covers Milan purchases through 25 September; purchases across both exchanges were about €76.6 million by that date. Ferrari’s 2030 plan points to roughly 5% annual revenue growth from 2025. That leaves room for solid long-term progress, but today’s valuation needs either stronger earnings growth or a sustained premium to produce high returns. Ferrari could be a good long-term holding, but I would be cautious about starting a large position at today’s valuation. Its competitive advantage looks durable; the harder question is whether earnings will grow fast enough to deliver attractive returns from roughly 37 times earnings. Your luxury-company interpretation is well supported. In Q2 2026: - Revenue rose 8% to €1.94 billion, while deliveries fell approximately 3.7% during model changes. - Operating profit rose 10%, with a 31.2% operating margin. - Management reported an order book covering all of 2027. That combination shows Ferrari’s ability to earn more through its model mix and personalisation, without needing to manufacture many more cars. Ferrari’s Q2 results. Customer loyalty adds substance to the brand story: approximately 84% of new cars sold in 2025 went to existing Ferrari owners. Controlled supply, collector relationships and limited editions give Ferrari considerable pricing power. My assessment is that these advantages can persist for years, provided management protects exclusivity and keeps producing desirable cars. Ferrari’s 2025 annual report.