Strategic Equity Stakes in High-Growth Consumer Brands: The Roger Federer–On Case Study

The intersection of celebrity influence and strategic equity stakes in consumer brands has long captivated investors. At its core, this dynamic hinges on three pillars: brand alignment, long-term vision, and market timing. Roger Federer's 3% stake in On Holding AG (NYSE: ONON) offers a masterclass in how these elements can coalesce to generate exponential wealth. By examining this case, we uncover principles applicable to a broader spectrum of high-growth investments.

The Power of Brand Alignment

Federer's investment in On was not merely a financial transaction but a strategic partnership rooted in shared values. The Swiss tennis legend's personal connection to the brand began when his wife, Mirka, purchased On sneakers during a casual shopping trip. This organic link led to a collaboration that leveraged Federer's global reputation for excellence and authenticity. On, in turn, offered a premium product line (the Roger Pro) infused with Federer's legacy and the brand's proprietary technologies.

This alignment was critical. Unlike many celebrity endorsements that risk diluting brand equity through overexposure, Federer's partnership with On emphasized innovation and craftsmanship. The brand's focus on premiumization—positioning its products as high-quality, high-margin solutions—resonated with consumers willing to pay a premium. By 2024, On's gross margin had reached 60.6%, reflecting strong pricing power and brand loyalty.

Long-Term Vision and Market Timing

Federer's 3% stake, acquired in 2019 during On's pre-IPO round, was a calculated bet on the company's potential. At the time, On was a niche European brand with a loyal customer base but limited global presence. The investment capitalized on an inflection point: On was poised to expand its direct-to-consumer (DTC) strategy, which would later drive 40.3% growth in DTC sales in 2024. Federer's patience and long-term horizon allowed the investment to compound as the brand scaled.

By Q2 2025, On's valuation had surged to $17 billion, making Federer's stake worth an estimated $500 million—a 10x return on his initial investment. This growth was fueled by strategic market timing: On expanded aggressively in high-growth regions like Asia-Pacific, where sales grew 84.5% in 2024 alone. The company's ability to adapt to shifting consumer preferences—prioritizing sustainability, performance, and digital engagement—further solidified its market position.

The Risks and Rewards of High-Multiple Valuations

While On's trajectory is impressive, its current valuation raises questions. As of Q2 2025, the company trades at a trailing P/E of 140 and a forward P/E of 91—well above the S&P 500's valuation. A PEG ratio of 3.9 suggests that the stock's growth expectations may outpace its fundamentals. This disconnect highlights a key risk for investors: overvaluation amid macroeconomic uncertainties, such as trade policy shifts and currency volatility.

However, On's strong balance sheet (CHF 924 million in cash as of 2024) and expanding EBITDA margins (16.5% in Q1 2025) provide a buffer against near-term headwinds. The company's ability to maintain its premium pricing power and expand its global footprint will be critical in justifying its valuation.

Investment Lessons from Federer's Stake

1. Authenticity Over Exposure: Federer's partnership with On avoided the pitfalls of overexposure. Instead of leveraging his fame for short-term gains, he focused on long-term brand integrity, a strategy that resonated with high-net-worth consumers.
2. Timing the Inflection Point: Federer's 2019 investment capitalized on On's pre-IPO phase, a period of undervaluation and high-growth potential. Early-stage investments in scalable brands often yield outsized returns when executed with precision.
3. Diversification and Risk Management: While On's success is remarkable, investors should balance high-growth consumer brands with more stable, diversified portfolios. On's valuation volatility underscores the importance of hedging against sector-specific risks.

A Call for Strategic Patience

The Federer–On case study underscores a timeless investment truth: aligning with brands that prioritize innovation, quality, and long-term value creation can yield extraordinary returns. However, it also serves as a cautionary tale about the risks of overvaluation. For investors considering similar opportunities, the key lies in balancing ambition with prudence.

As On prepares to report its Q2 2025 earnings on August 18, 2025, the market will closely watch whether the company can sustain its momentum. A pullback to CHF 55–60 (its 50-day moving average is CHF 64) could present a more attractive entry point for long-term investors.

In an era of fleeting trends and speculative hype, the lesson from Federer's stake is clear: strategic equity stakes in high-growth consumer brands thrive when rooted in authenticity, patience, and a deep understanding of market dynamics.