The Intrinsic Value Podcast - The Investor’s Podcast Network TIVP035: Ferrari (RACE): High-Speed Compounder w/ Shawn O’Malley & Daniel Mahncke
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Aug 31, 2025 Explore the fascinating world of Ferrari's ultra-luxury vehicles and their impressive market valuation. Discover why the brand insists on limiting supply to maintain demand and how it mirrors the exclusivity of fashion house Hérmes. The hosts discuss Ferrari's strategic shift towards hybrid and electric vehicles while maintaining its high-performance legacy. Learn about the unique customer selection process, the strong ownership culture they cultivate, and how the brand leverages its IP for pricing power. Insights on the future of Ferrari amid changing automotive trends make this discussion a must-listen.
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Pricing Power Trumps Volume
- Ferrari compounds earnings through pricing power and limited volume rather than scale.
- High returns on capital plus operating leverage let EPS compound at double-digit rates.
Scarcity Is Built Into The Brand
- Enzo Ferrari built scarcity into the brand: "one less car than market demands."
- That founder-driven obsession created enduring heritage and exclusivity.
Tiny Volume, Massive Valuation
- Ferrari sells only ~14,000 cars yet commands a near-$90B market cap due to very high prices.
- Average starting price is roughly $250k and special editions reach millions, driving disproportionate revenue.