Ferrari’s Recent IPO: Mere Luxury Problem?

Even though they are one of the most aspired automakers on the planet, does the recent Ferrari IPO debut on the NYSE a mere “luxury problem” for the world’s 99-percent?

BY: Ringo Bones 

Even relatively well-off households whose average income is around 250,000 US dollars are still too cautious to actually own one even though they still covet one in their dreams, most of us 99-percenters are viewing the luxury sports car maker Ferrari as a mere “luxury problem” economists around the world had been closely watching its initial public offering debut at the New York Stock Exchange back in Wednesday October 21, 2015. Cautious hedge fund managers say Ferrari’s strong debut doesn’t necessarily bode well for IPOs but everyone has a reason to be optimistic given that the Italian luxury sports car maker’s stock managed to trade above its IPO price. 

Ferrari NV sparkled on its first day of trading back in Wednesday October 21, 2015 as the luxury sports car maker celebrated the first step toward becoming an independent company. The stock traded as high as 60.97 US dollars or 17-percent above the 52 US dollar-a-share price of its initial public offering that managed to raise 893-million US dollars for parent company Fiat Chrysler Automobiles NV. Shares managed to close at 55 US dollars – up 5.8 percent. 

Currently, about 9-percent of Ferrari is publicly traded, creating a scarcity premium that is sustaining the share price, according to investors and analysts and thus fueling the caution of some of the overall health of IPOs currently traded on the NYSE. But nevertheless, they cheered on the success of Sergio Marchionne, chief executive of Fiat Chrysler and chairman of Ferrari, in convincing investors that when it comes to valuations, Ferrari has more in common with luxury goods makers like Hermès International SCA than high-end car makers like BMW AG.   

Back in Wednesday October 21, 2015 – red Ferraris lined the street in front of the New York Stock Exchange where Mr. Marchionne rang the opening bell without deviating from his trademark black sweater over a collar shirt. His one concession to adjusting his preferred wardrobe for the occasion was a small Ferrari pin with a yellow backdrop and the black prancing horse that has become the symbol of one of the world’s most-recognizable brands.