Why Ferrari Banned Floyd Mayweather

Justin Bieber, Kim Kardashian and Floyd Mayweather are no longer allowed to buy a new Ferrari.

They are all on a blacklist of people that

Ferrari no longer sells to.

The trio have insulted Ferrari because they

didn’t treat the cars with the necessary respect.

Bieber, for example, repainted his Ferrari,

put a rear spoiler on it, and carelessly left

it on some street after a party.

Ferrari hates it when owners don’t respect

their wishes, as according to them, owning

a Ferrari is representing the brand.

Homemade modifications are generally frowned

upon and do not even think about reselling

your car within the first year after buying

it.

That’s also why Floyd Mayweather was banned.

He likes to change his cars frequently.

All this might sound crazy, but it is part

of the reason why Ferrari outperforms almost

all other car makers on the stock market.

Covid, climate and semiconductors.

While the car industry is under immense pressure

from the current crisis, the Ferrari stock

didn’t seem to care.

It turns out that Ferrari has mastered a strategy

that only few companies have.

It all starts in a small town in northern

Italy…

Whenever Ferrari wins a Formula 1 race, the

local pastor rings the church bells in Maranello,

the home of the Ferrari brand.

In 2019, the bells were rung three times.

The two years after, it remained completely

silent.

Those were not the most glamorous years for

the team.

But surprisingly, the Ferrari stock seemed

pretty much unaffected.

Not only by the results in Formula 1 but also

by all of the other madness that was going

on worldwide.

The Ferrari stock just kept going up, while

other car companies struggled.

Since going public, the stock gained 350 per

cent.

It is easy to see why: Ferrari sold more and

more cars.

Expensive cars: according to a 2018 study,

Ferraris cost an average of 280,000 euros.

But the margin is even more remarkable.

Per car, Ferrari makes 69,000 euros in profit.

No other manufacturer comes close.

That crazy profit margin is already a hint

that Ferrari is doing something different.

Ferrari does not think of itself as a car

manufacturer, but as a luxury brand.

What difference does that make?

A big one, when you look at the stock market.

An important indicator on the stock market

is the price-earnings or P/E ratio.

It tells investors how much a company is worth

and if it is overvalued or undervalued.

The calculation is easy: share price divided

by earnings per share.

It’s easier to understand with an example.

At the end of 2021, Ferrari had a P/E ratio

of nearly 50.

That means that if earnings stayed constant

it would take 50 years to recoup the share price.

50 years is a very long time, so a P/E ratio

of 50 is a very high value.

Especially for a car manufacturer.

Just look at the P/E ratios of other car brands.

Compared to those, the Ferrari stock seems

to be overvalued.

Investors are either assuming a glorious future

with much higher earnings, or they see Ferrari

as a low-risk investment, even in times of

crisis.

And this is where it gets interesting.

Because usually, car companies struggle in

those times.

This was the moment the WHO announced that

we were living in a pandemic.

July 2021 was the hottest month ever recorded.

But while the World Climate Conference was

held and CO2 emissions were restricted, the

production of internal combustion cars was

running hot at the Ferrari factory.

And while all other carmakers struggled to

produce at the end of 2021 because of the

lack of semiconductors, Ferrari reported a

90 per cent increase in sales.

Ferrari seemed unaffected by the world’s

situation and was a safe bank during the pandemic.

Obviously, they have an incredibly luxurious

situation.

Because you can’t just buy a Ferrari, there

are waiting lists.

And the price basically doesn’t matter.

Ferrari can simply pass on the higher material

prices to the customers.

Just as other luxury brands like Hermés or

Rolex do.

Ferrari is positioned as a luxury goods manufacturer

and that also explains the incredibly high valuation.

Look at the P/E ratio of other luxury brands.

Ferrari clearly falls into that cluster, and

not that of the other car brands.

As a car manufacturer, Ferrari would not have

established such a high market valuation.

But how did they achieve that unique position?

If you want to create a luxury brand, simply

selling expensive products is not enough.

You need reputation, exclusivity and often

tradition.

Rolex, for example, is proud of its sporting

achievements like sponsoring the first woman

to swim the English Channel and today has

a strong connection to Tennis and Golf.

Ferrari is the most successful racing team

in Formula 1 – and also the only car brand

that’s been in F1 since the beginning.

From the start, Enzo Ferrari and all of the

cars after him stood for “Racing.”

Competing in F1 wasn’t so much about selling

more cars.

It was the other way around.

Ferrari established the idea that they are

selling cars to finance their Formula 1 team.

So practically everyone who bought a Ferrari

became part of the Ferrari team and supported

the vision of making sports cars even better.

This creates a special community – and exclusivity.

A large part of Ferraris’s business is actually

not selling cars, but merchandise!

Wearing a Ferrari hat or shirt makes you feel

part of a very exclusive and successful community

– even if you don’t own a Ferrari.

This feeling of exclusivity is also ensured

by limiting the number of cars sold – and

the unique way they are distributed.

Here is an example.

There was a limited number of the Ferrari

model “Daytona SP3”.

599 pieces.

Even before the model was officially presented,

all cars had already been sold – for around

two million euros each.

But it’s not first-come, first-serve.

Buyers have to “qualify” for the car.

There’s even a saying . “You don’t choose

Ferrari.

Ferrari chooses you.”

To buy such a noble model like the Daytona,

you should have “earned” one.

Having several Ferraris already in your garage

helps, as long as you have shown that you

treat the cars well.

Only go to Ferrari dealerships.

Show up at Ferrari events.

Basically love the Ferrari brand and never

show up with a Lamborghini.

And do not paint Nyan-Cat on your car and

call it Purrari – Ferrari might sue you.

Speaking of Lamborghini.

Apparently, Ferruccio Lamborghini owned a

Ferrari but didn’t like the clutch so he decided

to go to Enzo and suggest how he could improve

the car.

Enzo told him to ‘go away’ and ‘stick to the

tractors’.

Lamborghini was so pissed he started his own

company!

A brilliant example of Ferrari’s arrogance…

or let’s say confidence.

It’s also reflected in their sales agreements.

They include a minimum holding period of one

year, because Ferrari does not want the cars

to become objects of speculation, but only

serve the most loyal customers.

You can compare it to other goods with more

demand than supply.

Just look at concert tickets for famous musicians.

Tickets are often completely sold out after

5 minutes.

And after six minutes you can buy the same

tickets for twice the price on eBay.

That’s neither good for the artists nor

the fans, but only for the sellers on the

black market.

The same thing would happen with Ferraris.

In this sense, Ferrari’s rules can be compared

to personalized tickets.

Only those who buy the product should use

or own it.

Owning a Ferrari seems to be like having a

guaranteed long-term investment.

Of course, you can also drive your investment…or

race with it through Monaco.

This is not a call to invest in Ferrari.

Being a public company can be tricky, especially

when your success depends on exclusivity.

Rolex, for example, is still not public but

owned by a foundation.

Public companies need to make their shareholders

happy.

That means they always need to grow and ideally

sell more.

But the more cars you produce the harder it

gets to stay exclusive.

On the other hand, since the church bells

in Maranello started ringing more often again,

Ferrari doesn’t have to worry about the

future.

The city can probably afford golden church

bells by now.

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