Stock Spotlight: Ferrari

FILMED IN JUNE 2025

Rebecca Irwin explains why Ferrari remains a standout stock - combining global brand power with strategic scarcity to tap into a vast and luxury market.

Transcript

Ferrari is a company that really needs no introduction. Ferrari’s product—what it sells—is quite simply a car, or a luxury car. But we like to think about Ferrari as a luxury company that happens to sell cars. Ferrari really stands for the power of passion. It’s a timeless icon that seems to mean more and more in this ever-changing world.

It sits at the very top of the luxury pyramid, and the wait lists—the time to get a new Ferrari—are very long. So a potential new client who wants to buy a Ferrari might have to wait years, and they’ll have to demonstrate to the company that they understand what it means to be a Ferrari car owner or a caretaker of the brand. So Ferrari, at its simplest, sells cars, but we think it’s much more dimensionalised than that.

Ferrari really responds to an emotional need. Owning a Ferrari, you really feel something. Ferrari stands for that passion of power—the feeling that you get from the sound and feel of a Ferrari engine. When you own a Ferrari, you own a piece of that, you own a piece of heritage, and that’s really powerful.

It also responds to that age-old need to announce to those around us that "I’ve made it, I’ve arrived," and nothing really says that quite as loudly as driving a Ferrari does. The beauty of Ferrari is that the addressable market is so large relative to the number of cars that Ferrari would ever want to sell.

If you think about the addressable market as being the global luxury market—that is very approximately $350 billion—and you compare that to the under 14,000 cars Ferrari sold last year or the under €7 billion that it generated in revenues, Ferrari is just so small. It has such a long runway of growth, and as investors looking for durable growth from Ferrari, this is a very comforting number.

We have owned Ferrari for many years, and it’s proven to be a company and a stock that can perform well against different economic backdrops. Why is this? It really comes down to its strong brand desirability and really good scarcity management. In a period of global uncertainty that we’re in now, a company that can control its fate, revenue, and earnings is an exceptionally rare one to us.

How does Ferrari do this? Management has scarcity management and brand desirability as its number one, number two, and number three priorities—and has maintained that against any backdrop. This has allowed it to perform well in different periods of time. Because of its supply-constrained model, it has been able to deliver strong revenue growth, strong free cash flow, and robust earnings growth with really muted cyclicality. That durability of growth is very valuable to us as investors in this moment.