Ferrari's new baby f80 is priced at exactly 3.7 million dollars. But if you dream of "oh I wish I had that kind of money to buy this car", having money is not enough. Even people who have this money cannot buy this car. Because there are special conditions to buy this car. Yes, you cannot buy the Ferrari f80 with your money. Because the very limited production of 799 units of the Ferrari f80 was already sold before the car was even introduced to us mortals. So who do these cars go to? Who buys these cars? Why do they produce so few units and perhaps most importantly, how can Ferrari reach a huge valuation of 90 billion dollars by selling only 14,000 vehicles per year. Today, we will understand this together. First, we will understand Ferrari's special marketing luxury management strategy. Then, I will compare Ferrari with competitors such as Porsche. We will look at valuations, different criteria and then whether Ferrari could be a good investment. Thus, it will be a good content for both car lovers and investment lovers.
Ferrari's biggest secret is its strategy of being special. Ferrari is not just a car brand, it is also a luxury brand. But beyond that, it is not enough to have money to own a Ferrari. You have to be a part of the special club created by Ferrari. For example, Luc Poirier, a real estate investor in Montreal, has 42 Ferraris and only thanks to this did he earn the right to buy the f80 and sees this as a milestone in his collecting career. They have recently given permission for 42 Ferraris. Because buying a top-level Ferrari is not a simple purchase, it is a privilege. Ferrari really knows how to keep demand at its peak and make its brand special.
The basis of its strategy is scarcity. Because the scarcity of something automatically increases its value. Founder Enzo Ferrari has a famous saying. Ferrari always produces one less car than the market demands. This formula is the main factor that brings Ferrari to the top. I want to give you some striking data. I will compare Ferrari to Volkswagen. Volkswagen sold exactly 9 million vehicles last year. Ferrari's market value is $90 billion and Volkswagen's is $40 billion. I mentioned how many vehicles Ferrari has sold at the beginning, only 14,000 vehicles, and I am not comparing Ferrari only with Volkswagen. For example, let's compare it with another supercar manufacturer, Porsche. While Porsche's value is $54 billion, Ferrari has a value of $90 billion. In other words, it almost doubles.
Ferrari is not only the most valuable automobile company in Europe, if I am not mistaken, it is also the third most valuable automobile manufacturer in the world after Tesla and Toyota, and I repeat, it has sold only 14,000 vehicles. Ferrari does not see itself as an automobile manufacturer anyway. In the words of CEO Benedetto Vigna, they say they are a luxury brand that produces cars and take Hermes as an example. By limiting the production of Hermes bags, they create crazy demand. Ferrari also offers its rarest models only to its most loyal customers. If you want to buy one of Ferrari's hypercars, you need to prove your loyalty to the brand. To do this, you need to attend Ferrari events and have purchased more than one model. Luc Poirier bought 42. You are even expected to restore classic Ferraris. You have to be so loyal to the brand that Ferrari follows all of these things. If you follow Ferrari's rules, the rewards can be great.
On the one hand, you are buying one of the rarest cars in the world, but there is something more important. These vehicles are also very good as an investment. The LaFerrari, which was sold for $1.4 million in 2013, is currently being sold for $3.8 million. Ferrari hypercars are not just vehicles, they are also investments. So can you buy a Ferrari if you have enough money and passion? Well, maybe standard models are easier. If you are willing to wait a few years, you can buy them. However, in limited production Ferraris, money is not enough, status is also required. For example, it is known that collectors buy an average of 10 Ferraris before buying a LaFerrari. Only then can they prove themselves and let me buy a Ferrari, sell it immediately and make money from the investment. That is not possible either. Because they have strict rules on this matter. They are absolutely against speculation. Last year, a real estate agent in Houston bought a Purosangue for about $1 million and sold it immediately, then the Ferrari dealer sued him, saying he breached the contract.
There are of course brands that are trying to imitate Ferrari's success. McLaren, Bugatti, Lamborghini are all trying to do this. But none of them can reach the level it has reached. Yes, they all produce ultra-special models. There is high demand for all of them, but none of them are as successful as Ferrari. For example, Porsche compared itself to Ferrari when it went public in 2022. However, despite selling more than 300,000 vehicles last year, its shares have fallen by around 30% since the public offering. Another example would be Aston Martin. It is also trying to create a loyal audience like Ferrari. But its shares have lost 95% of their value since 2018.
Will Ferrari's formula work in the future? Of course, it is not possible to read the future. But if it continues to follow the path of successful luxury brands like Hermes, produces a limited number of vehicles instead of being greedy and selling too many vehicles, and manages this whole club issue well, why not, I think it will continue. Because Ferrari does not sell cars. It sells a dream. I have never seen another brand that is managed so effectively and strongly. In this context, you will say that I normally do not invest in automobile companies, but you are a Tesla investor, that is an exception. Because Tesla is not an automobile company, it is also an autonomous driving company. It is also a robot company, an artificial intelligence company. Otherwise, I do not invest in automobile companies. Because profit margins are immediately narrowed, there is a lot of competition, etc. But Ferrari falls into a special category of its own. Therefore, it is useful to examine Ferrari's stock a little.
The short form of the stock, Race, is currently the price of the stock at $508.15. It closed Thursday with an increase and seems to be slightly retreating on Friday. The value of the company is 90.89, close to $91 billion. It is a very expensive stock. Price divided by earnings forward, that is, when we look at it forward, it is 54.34, I will compare it with the rest of the sector a little, I can say that it is a more expensive stock than everyone except Tesla. The forward expectation of earnings per share is around $9.35. No one has short-sold the stock. Everyone is probably aware of the strength of the stock. Seeking Alpha analysts have bought the stock. Wall Street analysts have given a buy. When we look at it qualitatively, there is a hold regarding the stock. Because the valuation is quite high. I just mentioned why it got a Valuation F and the price-earnings ratio, but the profitability is the same, the momentum of the stock, in other words the demand for the stock, seems high. The stock has increased by 30.14% in the last year. The stock has increased by 19.62% since the beginning of the year. The stock has increased by 788% since it went public. A performance that does not resemble Porsche, to be honest.
When I look at the financial statements, there is a turnover of 1 billion 798 million in the last quarter and it also shows a significant growth compared to the same quarter last year. 7% growth year-on-year. After all, this is not a company that is growing very much anyway. If you remember, it keeps its production numbers limited, but it increased its gross profit by 9.91% compared to last year. When we look at it in absolute terms, it has a gross profit of around 902 million dollars. We will examine whether there is another similar one in the automobile sector with almost 50% gross profit in a moment. After deducting the expenses, the main operating profit is 428 million dollars. In other words, if we say 1,800, there is a profit of about 400 million dollars in turnover. No matter how you look at it, it leaves a profit at the bottom of around 23%. Some of you may know how difficult this is in the automobile sector. I am doing these analyses through Seeking Alpha.
Here, I put Porsche as a competitor, of course, its direct competitor, I put Mercedes, another luxury vehicle manufacturer, I put Tesla, the world's most valuable automobile manufacturer, I put Toyota, the world's largest automobile manufacturer. I also put Volkswagen, the largest automobile manufacturer in Europe. Ferrari's market value is 90 billion dollars, Porsche is 54 billion dollars, Mercedes is 59 billion dollars, Tesla is in a completely different league, 1.14 trillion dollars, Toyota is 236 billion dollars. Toyota, if I'm not mistaken, sells around 10 million vehicles per year. Volkswagen is 52 billion dollars. So you can see from here how high a valuation Ferrari has, despite selling only 14000 vehicles, when we look at their valuation ratios, the price divided by earnings forward is 53.65, Porsche is 13.4, Mercedes is 5.56, Tesla is in a different league here again, it has an incredibly high ratio of 135, Toyota is 9.10, Volkswagen is 2.75. It has no equal. So don't think of Tesla as a car company. There are other factors within Tesla that keep the valuation so high. But other than that, Ferrari really continues in its own league. It has a price-earnings forward valuation 4 times higher than Porsche and it can grow, the company has 11.84% growth while the rest of the car sector is still crawling.
2024 was not very good for the automobile sector, but it seems that there was no problem in the luxury market again. There is 8.33% in future growth expectations. Porsche is almost not growing in the future. Here, we can say that Ferrari is competing only with Tesla, do not forget that Tesla produces economical vehicles, Ferrari is in a completely different category. The company also has a great performance in terms of profit per share growth. There is a 20.72% profit per share growth in the last 3 years. The closest we see is Toyota. 14.17%. By the way, you can make these comparisons as you wish. Gross profit margin is 50.13%, exactly 2 times Porsche. Almost 3 times Mercedes. 3 times Tesla. You can think of it as 3 times Toyota. Net profit margin is 22.85%, more than 2 times Porsche, 3 times Mercedes, close to 3 times Tesla. Again, more than 2 times Toyota. Net profit per employee is an interesting indicator, 298,000 dollars. This is around 108,000 dollars for Porsche, 72,000 dollars for Mercedes, 56,000 dollars for Tesla, 84,000 dollars for Toyota, and 22,000 dollars for Volkswagen.
The turnover is great, the profit margin is great, there is growth, the profit per share is great, the company's cash flow is great, it is a very good company. I think it is a good investment, the price is a bit high. It may be subject to corrections, but if the term is long and Ferrari manages its brand as strongly as it has managed until today, I think you will not have a headache. Plus, it seems possible for Ferrari to take this luxury brand to some other areas. Because sooner or later, every rich person wants to own a Ferrari.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
