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Short Thesis Summary
Demographics, technology, the Green Movement, electric and autonomous vehicles along with substantial over-production by premier ICE manufacturers are all culminating to derail RACE stock, which is sitting near its all-time high right below ~$180 per share in the USA sporting a ~$33 billion market cap. The golden age of Formula-1 and a constantly growing demand curve for exotics (especially Ferrari) is over. The dominance of ICE technology and loud powerful engines is rapidly coming to an end. The entire group (Ferrari, Lamborghini, McLaren, Aston Martin, Porsche, etc.,) are cranking up production and trying to jam as many vehicles as possible into the channel for the global wealthy consumer base while this business cycle and the longest-running bull market of all time still have legs.
All the manufacturers recognize the “game” of exclusivity in this segment is over, and they are working furiously to drive profits while they can. The declining residual values of the supercars is a poorly-kept secret among enthusiasts, but apparently is completely unknown by the investor and analyst community. Asking prices remain absurdly high and Ferrari salesmen, who stand to lose their livelihood, are working hard, to keep up the façade that there is still substantial backlog and that used cars are holding up in value. It is a fantasy. Our extensive checks show used Ferraris are for sale everywhere, and not moving. We have checked with multiple dealers from coast-to-coast and dealer lots are filling up and full, and there is ample negotiating room. Electric vehicles and the green movement make ICE engines unappealing and the scorn of society. Even if these ICE stalwarts had the technology and ability to transition to electric vehicles, there is no differentiation. How would they catch Tesla and others
