Ferrari N.V. (NYSE:RACE) is technically a carmaker, but the market does not price it like one. At about $388 a share and $73 billion in value, it trades near 39 times earnings, the kind of multiple reserved for luxury houses like Hermès rather than mass automakers like General Motors. After a roughly 23% pullback from its high, here is what the investors are buying at that price: a bet that Ferrari’s most unusual trick, selling fewer cars than people want, keeps minting luxury-level profits for years.
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The Scarcity Math
Ferrari makes its money by deliberately capping production. The company ships only around 13,700 cars a year, fewer than buyers demand. That scarcity is the whole engine. Its order book already stretches through 2027, so the cars are effectively pre-sold. Buyers pile on personalization, custom paint and trim, which now makes up more than 20% of car and parts revenue at very high margin. The result is a core profit margin near 39%, closer to a luxury-goods maker than any carmaker. So, the 39 times multiple is a bet that Ferrari keeps raising price and mix on a roughly fixed number of cars, the way a luxury house lifts the price of a handbag without making many more of them.
The Bull Case
The bullish thesis is simple. With its manufactured scarcity, Ferrari has a pricing power almost no other company has. A years-long waiting list protects the company from discounting and cushions it in downturns. Its clientele is ultra-wealthy and spread across the globe, so a wobble in one region rarely sinks demand. The rising personalization mix keeps lifting margins without adding factory volume. And the Formula 1 halo and brand licensing offer extra ways to earn from the brand name.
The Bear Case
The bears say 39 times leaves no room for a stumble. Because volume barely grows by design, all the growth rests on price and mix. And there is a ceiling to how far that can stretch. Any crack in luxury demand, a China slowdown or a hit to the wealth effect, could de-rate the stock quickly. The bigger worry is electric. Ferrari’s new Elettrica pushes the brand into battery power, and some fear that losing the scream of a V12 engine chips away at the very mystique and resale values that justify the price.
The Bottom Line
Now let’s ask the question that really matters. Can a deliberately low-volume Ferrari N.V. keep compounding on price and mix, even as it goes electric? For a growth investor, the scarcity model and rising margins are the appeal, if the mystique survives the switch. For a value investor, 39 times is justified only if luxury-house economics hold. An income investor gets little here, since the dividend is modest at 1.09%. The scarcity moat is real and genuinely rare, yet at this price the brand must stay magic through the electric era. Both outcomes fit today’s valuation.
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Market Sentiment
According to Insider Monkey’s database, 41 hedge funds held Ferrari at the end of the second quarter of 2026, down slightly from 43 the quarter before. The value of those combined holdings rose over the same period, from about $1.1 billion to roughly $1.7 billion.
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This article is originally published at Insider Monkey.
