Warren Buffett's Faith In Ferrari Pays Off As Italian Automaker Speeds Toward $100B Valuation

Warren Buffett‘s faith in Ferrari RACE seems to be paying off, with the luxury carmaker’s market value approaching $100 billion.

What Happened: Despite his skepticism towards the auto industry, Buffett expressed confidence in Ferrari at Berkshire Hathaway’s shareholder meeting last May, Fortune reported. This faith in the Italian luxury sports car manufacturer seems to be justified, as Ferrari’s 2023 net profit has surged by 34% from the previous year. The company has also raised its 2024 forecast and reported that its order books are nearly full until 2025,

These developments have propelled Ferrari’s shares to record highs, bringing the company’s market cap close to the $100 billion mark. This is a significant achievement, considering Buffett’s general aversion to automakers due to the industry’s fierce competition and lack of permanence.

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Despite this stance, Berkshire Hathaway made an exception for China’s BYD, which recently surpassed Tesla as the global leader in electric vehicle sales. Another exception was Berkshire’s purchase of GM shares in 2012, which were all sold by the end of last year.

Why It Matters: Ferrari’s impressive performance in 2023, including an 11% year-on-year sales growth in the fourth quarter, has contributed to its soaring market value. The company’s decision to bring on board F1 legend Lewis Hamilton for the 2024 season has also been a significant factor in its recent success.

Hamilton, who has more than 100 wins and seven championships under his belt, is widely regarded as one of the best Formula 1 drivers of all time. His move to Ferrari, one of the most popular teams in the sport, has been seen as a potential boon for Liberty Media Corp, which owns the rights to Formula 1.

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