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Ferrari (NYSE:RACE), the iconic luxury supercar manufacturer, has delivered exceptional returns since its IPO on October 21, 2015. After going public at $52 per share, the stock now trades around $474, meaning a $10,000 investment at the IPO would have grown to more than $91,000 in just under nine years.
Resilient Customer Base and Pricing Power
Ferrari primarily caters to ultra-high-net-worth individuals, with most of its cars priced between $200,000 and $600,000. This affluent customer base is largely immune to economic fluctuations, allowing the company to raise prices when needed. The exclusivity and brand appeal of Ferrari’s vehicles further bolster its pricing power, ensuring consistent demand and keeping the company’s order book full.
Unlike larger automakers, Ferrari produces vehicles in smaller batches, a strategy that helped it navigate the supply chain challenges that impacted the global auto industry over recent years. Its production scarcity, coupled with high demand, has shielded the company from broader industry disruptions, preserving its profitability.
Consistent Growth Since IPO
Since going public, Ferrari has steadily grown its revenue and profits. From 2015 to 2023, Ferrari’s revenue increased at a compound annual growth rate (CAGR) of 10%, driven by rising shipments, which grew from 7,664 to 13,663 units annually. Over the same period, Ferrari's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also expanded at a 10% CAGR, with its EBITDA margin improving from 26.2% to 38.2%.
Ferrari’s resilience was on display during major global disruptions such as the COVID-19 pandemic, supply chain issues, inflation, and rising interest rates. While new car sales globally increased at a mere 1% CAGR between 2015 and 2023, Ferrari’s more insulated position in the luxury market enabled it to consistently outperform the broader industry.
In 2024, Ferrari expects its revenue to grow by about 10%, with an adjusted EBITDA margin of 38%. This growth will be supported by strong demand for models like the 296 series, the Purosangue SUV, and high-end vehicles such as the Roma Spider grand tourer. Additionally, Ferrari continues to meet demand for top-tier models like the Daytona SP3, priced at over $2.2 million.
Future Growth Plans
Ferrari’s future growth strategy is robust, as evidenced by its plans to introduce 15 new models between 2023 and 2026. In 2023 alone, the company launched four new models, with five more scheduled for 2024. The highly anticipated 12Cilindri Spider and Ferrari’s first fully electric supercar is expected to debut in 2025.
Looking ahead, analysts project Ferrari’s revenue will grow at a 9% CAGR through 2026, while adjusted EBITDA is forecasted to increase at a 10% CAGR. Ferrari’s adjusted EBITDA margin is expected to expand to 40% over this period. Given that the global auto market is expected to grow at a slower CAGR of 4.4%, Ferrari remains well-positioned to outperform other automakers in terms of growth and profitability.
