Ferrari makes waves on Wall Street

The stock traded as high as $60.97, or 17% above the $52 initial public offering that raised $893 million for parent company Fiat Chrysler Automobiles NV. Shares closed at $55, up 5.8%. The IPO valued the company at USD$9.8 billion.

Only around 9% of Ferrari is publicly traded, creating a scarcity premium that contributes to the high share price, according to investors and analysts. The success of Sergio Marchionne, Fiat Chrysler CEO and chairman of Ferrari in convincing investors that Ferrari has more in common with luxury goods makers like Hermès than high-end car makers like BMW was also applauded by them.

“Before today the big question was whether Ferrari should be valued as a luxury company and the answer we got is yes,” said Martino De Ambroggi, an analyst with Equita in Milan.

Red Ferraris Wednesday lined the street in front of the New York Stock Exchange where Marchionne rang the opening bell in his signature black-sweater-over-collar-shirt attire. The small concession: a small Ferrari pin with a yellow backdrop and the black prancing horse that has become an instantly recognisable icon anywhere in the world.

John Elkann, Fiat Chrysler’s chairman and a scion of the Agnelli family that founded Fiat more than a century ago, stood alongside Marchionne at the bell ringing ceremony.
Elkann, whose family investment company owns 29% of Fiat Chrysler, had much to celebrate as the car company’s shares have almost doubled since the Ferrari IPO announcement surprised markets last year.

Ferrari trades on the New York Stock Exchange under the symbol “RACE”, which Marchionne said was his second choice after he couldn’t get “RED,” for obvious reasons.

Ferrari’s free float could rise 1% to 10% if the investment banks that led the IPO sell off additional shares next month. Fiat Chrysler holds 80% of Ferrari while 10% belongs to Piero Ferrari, son of the company’s founder.

Last year, Sergio Marchionne said Ferrari could increase production to 10,000 cars a year without sacrificing exclusivity. He plans to increase sales in markets such as China while keeping them steady in mature markets like the U.S. and Europe where buyers can be on waiting lists for up to a year before taking delivery of a new car.

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