Ferrari is going to park on the New York Stock Exchange soon
under the ticker symbol, RACE. It is planning to sell 17.2 million shares for
as much as $52 each! This would allow the luxury company to raise a total $894
million and be valued at $9.8 billion. In this way, Ferrari would be valued at
nearly 35 times its yearly profits for the first half of the year. One of the
reasons it would be valued so high is because the company claims it is not just
a car company, rather it is a ‘luxury’ company. Other competitors like Daimler and
Audi trade at below 10 times earnings, while only Hermes trades at about 38
times profits. Although Ferrari’s sales
growth has been quite slow due to the lesser number of new customers every year
and its revenues growing at only 5% per quarter, the company has come up with
this new ‘luxury’ term that appears in its modified IPO filing 151 times, and
investors are just unwilling to ignore that. The good news is that the fancy
company wants to build more of its good-looking Ferraris soon in order to satisfy its
global demand for high-end luxury products from avid car lovers.
2 comments:
I think this is completely true about Ferrari. It is known as not just as luxury car, but a luxury item. The initial public offering for Ferrari is so high because it is known as one of the most luxury cars on the planet. Also, with an increase for luxury vehicles around the world, Ferrari is going to be getting a lot of business and increasing their sales. The niche market they are targeting is expanding.
This is odd, because I wouldn't suspect there to be more demand for Ferrari's than the company can handle, since it claims the IPO is to raise money to meet demand. I wonder if Ferrari will use this money to innovate their cars with new technology, or just make more of their preexisting cars. I wonder if Ferrari will ever try and make a slightly affordable luxury car, maybe something less than $50,000. I would like to see figures on the increase in demand for Ferrari's vehicles, because if there isn't enough demand to substantially increase revenues than the seemingly overvalued stock price won't persist. Also, now that the company is going public we will finally be able to learn about how lucrative of a company Ferrari actually is.
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