Ferrari (RACE): rarity is not a durable shield

2026-08-17 · By Lubin Danilo, founder of Lubin Investment

RACE: see the full analysis on Lubin Investment

Ferrari scores very high quality on my criteria, and its stock just about caught up with the price I consider fair after a sharp rise. But a separate score, resilience, ranks it in the middle: brand scarcity protects most of its revenue without amounting, in my model, to a durable shield against competition.

A new Ferrari is never bought, it is waited for. The order book already covers all of 2027, the 296 Speciale and Dodici Cilindri are sold out for their entire production run, and Maranello never builds more cars than it decides to, no matter how much demand shows up. That is the industry's core trick: organized scarcity pushes prices up, protects the brand, and turns every buyer into an ambassador who had to earn their spot.

In May 2023, a few miles from the Maranello factory, twenty-one rivers burst their banks across the Emilia-Romagna region. Nine people died, more than ten thousand were displaced, and the Formula 1 Emilia Romagna Grand Prix, held every year at nearby Imola, had to be cancelled. Ferrari donated one million euros to the relief fund. This is not a weather footnote: it is a blunt reminder that the entire production of the rarest brand in cars sits in a single region of the world.

On my site, every stock gets a quality score out of 10, a purely financial one: is the business profitable, is it growing, is the balance sheet sound today? But I also run a second score, resilience, which I introduced in detail by ranking fifteen well-known stocks: it runs from A to E and asks a harder question, about tomorrow rather than today. Ferrari was not in that ranking yet. Here is what happens when I apply it, and why the scarcity that makes the brand so appealing is not, on its own, enough to protect it over time.

A strong quality score, and a price that just caught up with it

On my financial criteria, Ferrari checks most of the boxes. Its net margin reaches 22.3%: out of every 100 dollars of sales, a bit over 22 end up as real profit, well above what most industrial companies can show. Quarterly revenue climbed from about $1.05 billion in late 2021 to $1.85 billion in early 2026, a 13.2% average annual growth rate over the period, driven by price and personalization rather than volume: second-quarter 2026 deliveries actually fell to 3,366 cars, as older models wind down ahead of their successors, according to Ferrari's official second-quarter 2026 results release. Ferrari is selling fewer cars, but at higher prices and with more personalization: special paint, carbon parts, and bespoke leather now account for over 20% of car and spare parts revenue.

Shares outstanding keep shrinking, from 184.6 million in late 2021 to 177.3 million in early 2026, roughly 0.9% fewer every year thanks to buybacks. Net debt could be repaid in just 1.2 years of cash generated, a low debt load by my standard. The one real caveat in the numbers: out of every 100 dollars of accounting profit, only 85 actually turn into available cash, below the 100% I like to see, a sign that the gap between order, production, and customer payment is not yet fully optimized.

The price just made a rare move. Three weeks ago, the stock traded at $360 while my model judged a fair price up to $390, an 8% discount. Today, at $414.85, my computed fair price sits at $415.26: the discount has shrunk to 0.1%, next to nothing. The stock trades at 49.4 times its annual free cash flow (the cash actually left over after every bill), a high multiple in absolute terms, but one that still, at this exact level, sits just inside my buy zone rather than above it. Understanding why such a high multiple can still be judged acceptable means looking beyond balance sheet numbers, toward what my model calls resilience.

The moat, or why rarity is not automatically a shield

The moat, a concept I detail with other examples in a dedicated article, is what stops a competitor, even a better-funded one, from taking a company's place. On this exact criterion, my model gives Ferrari zero points out of two. The number is surprising at first glance: the brand does protect 84% of revenue through real pricing power, nobody haggles over a Ferrari's price the way they would over a mainstream sedan.

The issue is not the brand's strength today, it is what my model requires to validate a real moat: a barrier competitors cannot replicate within three years, AND a real cost for the customer who might look elsewhere. Ferrari fails both tests, not because it is fragile, but because at least three credible substitutes exist for the same wealthy buyer chasing automotive exclusivity: Lamborghini, Bugatti, Pagani, McLaren, and now a new generation of Chinese hypercars. A buyer able to put several hundred thousand dollars into a car is never truly locked into one brand, however desirable. That is very different from Adobe, where switching video-editing software means relearning an entire workflow: Ferrari's rarity sells status, it does not technically lock anyone in.

It is nearly the same conclusion as Salesforce in my August 1st resilience ranking: a near-perfect quality score, a brand everyone knows, and yet zero validated moat by my criteria, because competition remains credible and fast. Rarity sells at a premium today; it guarantees nothing about tomorrow.

The real fragility: it all sits in one region of Italy

The second criterion weighing on Ferrari's score is what I call residual dependencies: the suppliers, sites, or regulations a company depends on, with no fallback plan if the worst happens. My model flags four for Ferrari (specialized parts suppliers, specific alloys, vehicle regulatory homologation), but only one is rated both material AND fully unmitigated: the geographic concentration of production in Emilia-Romagna, around Maranello.

This is not a theoretical risk dreamed up by an overly cautious model. It is exactly what the May 2023 flood mentioned above showed: the entire production chain of one of the most profitable brands on earth rests on a single geographic area, with no second industrial site able to take over if that one becomes unreachable, as covered at the time of the Imola Formula 1 race cancellation. This is a deliberate choice, not an accident: 'Made in Maranello' is part of what the customer is paying for. But a marketing choice and an industrial risk can be exactly the same thing, seen from two different angles, and my model is built precisely to look at the angle the brochure never shows.

What reassures my model, on the other hand

The resilience score is not limited to these two criteria, and it would be dishonest to stop there. Over a seven-year horizon, my model judges that the need Ferrari serves, its own role in the value chain, and its ability to capture a financial share of it, all three survive: that is the maximum score on this criterion, the same one I detailed for Amazon in my resilience ranking. And on the two technology disruptions my model explicitly tests for Ferrari, artificial intelligence and the rise of Chinese hypercars, neither comes out as clearly unfavorable: their ability to actually replace a Ferrari for a buyer who wants one remains, at this stage, unproven.

Second-quarter 2026 results point the same way. Ferrari raised its full-year targets to roughly €7.6 billion in revenue and at least €9.68 in adjusted earnings per share, powered by demand that outstrips what the company chooses to produce, rather than the other way around. That is an almost unique situation in the car industry: the constraint is never the order book, it is the production capacity Ferrari deliberately refuses to expand.

The Elettrica: the real test for the moat in the years ahead

The most interesting test for the moat thesis has not happened yet. Ferrari unveiled the first technical elements of the Elettrica, its first fully electric car, in October 2025: a four-seat coupe with over 1,000 horsepower and roughly 530 kilometers of range, with the battery, motor, and inverter designed in-house rather than bought from an outside supplier, according to Ferrari's own presentation. The full reveal is set for spring 2026, with first deliveries in October 2026.

The real stakes are not technical, they are about identity. Ferrari's rarity rests as much on the sound and mechanics of a combustion engine as on the badge itself. An electric Ferrari has to prove that exclusivity survives the silence of an electric motor, exactly the kind of question my disruption test is built to answer but cannot yet settle. A telling sign that even Ferrari is not sure of the answer: trade press reports that a second electric car, originally planned for 2026, has reportedly been pushed back to 2028 for lack of sufficient demand, something Ferrari has neither confirmed nor commented on publicly.

What I actually make of it

Three separate scores, three different answers. The financial quality is there, solid on almost every criterion that matters to me. The price, after a 15% rise in three weeks, no longer offers the discount it did just recently: I would rather wait for a better entry point than pay 49 times cash flow at the top of its valuation range. And resilience flags a risk that neither the quality score nor the price capture on their own: a business that is excellent today, but whose main asset, rarity, protects less than it appears to against competition, and whose entire factory floor sits in a single region of the world.

This is not a negative verdict on Ferrari, it is exactly the kind of nuance I wanted to be able to see at a glance for any stock, rather than blending quality, price, and structural risk into one number that would end up hiding what matters most. You can track all three dimensions live on Ferrari's stock page, and I detail the full logic behind my fair price and my resilience score in my methodology.

FAQ

What is a company's moat (competitive advantage)?

It's what stops a competitor, even a better-funded one, from taking a company's place. A real barrier has to be hard to replicate quickly AND costly for the customer to leave. I cover the concept in detail, with other examples, in a dedicated article.

Why doesn't Ferrari have a moat in this model, despite its rarity?

Because several credible brands (Lamborghini, Bugatti, Pagani, McLaren, Chinese hypercars) can attract the same wealthy buyer chasing exclusivity. Rarity commands a high price, but it doesn't technically lock in the customer the way professional software would, for instance.

What is the resilience score, and how does it differ from the quality score out of 10?

The quality score out of 10 judges a company's current financial soundness. Resilience, graded A to E, judges its ability to keep its economic role in ten years against AI and disruption. A company can combine an excellent quality score with fragile resilience: these are two separate questions.

Is Ferrari stock a good deal today?

According to my model, it trades almost exactly at the price I consider fair, without a meaningful discount or premium: neither an obvious bargain nor clearly overpriced. This is not investment advice, do your own research.

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).