Ferrari: Luxury Identity Brand with Enviable Business Model

Arif Karim of Ensemble Capital Management presented his in-depth investment thesis on Ferrari (NYSE: RACE) at European Investing Summit 2020.

Thesis summary:

Ferrari is a well-known global brand in Formula 1 racing and among sports car afficionados. What most people may not know is that it is a fantastic business, offering customers a luxury identity brand. Part of this is signaling success and status or passion for racing and driving, and part of this is being a member of an exclusive global club comprised of peers with the same passion for a Ferrari.

Ferrari fosters a community of customers by creating exclusive group events that allow opportunities for members to come together to meet and enjoy the experience of driving their Ferrari. In addition the scarcity of its sought after cars can make it a profitable passion as well. As a result, Ferrari offers an emotional experience that is hard to substitute, which underpins its value and competitive advantage. The company’s ties to Formula 1 racing go back to the sport’s origins, as the desire to own one goes back to customers’ childhood, while fostering connections among its network of members makes it a unique company and business model. By creating a win-win-win relationship, Ferrari has built a rewarding business for all stakeholders.

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About the instructor:

Arif Karim is a senior investment analyst at Ensemble Capital. Before joining Ensemble Capital, he was a senior investment analyst and co-portfolio manager at Kilimanjaro Capital. Positions prior to that included senior equity analyst at Pacific Edge Investment Management and research associate at Robertson Stephens & Co. Arif graduated from the Massachusetts Institute of Technology with a BS in Economics and he is also a CFA charterholder.

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