Ferrari Races towards Summer IPO

By Zack Laubernds,
Money and Investing Writer

The Ferrari logo depicts one horse rearing up on its hind legs.

That horse will be stamped onto the front of Ferrari’s newest super car, but that horse on the front will also be accompanied by 670 horses of a different variety.

Horsepower that is. Ferrari’s new 488 GTB knows how to get up and go with the potential to reach 124 mph in 8.3 seconds, but the question on the minds of many is “Can Ferrari’s IPO get up and go?”

Scheduled for an initial public offering in June, Ferrari looks to be making a power move with the unveiling of the 488 GTB; A car that has been described by the Italian Auto Maker as “record breaking”.

When Ferrari goes public in June, the released share will comprise of roughly a 10 percent stake of the company with the remaining shares be released throughout the remainder of 2015.

This decision to go public comes at a time of uncertainty for the auto market globally.

The emerging auto markets in Brazil and Russia are facing unforeseen difficulties, while the European market looks to bounce back from a continent-wide recession, and the American and Chinese markets continue to impose stricter regulations on auto makers.

All of these factors as well as the exclusivity of Ferrari’s products have many questioning why the company would decide to go public now.

Many investors are rejoicing at the opportunity to buy into one of the world’s premier signs of wealth.

This move to go public also has many questioning if the company’s plans for the future are too ambitious.

Being “too ambitious” may be a good thing for Ferrari though, they continue to post record profits despite a decrease in the number of vehicles sold per year, bringing in just over $3 billion a year.

If Ferrari can successfully launch its IPO in June and maintain this large profit margin there is a chance that the company could begin to grow at an exponential rate over the next 5 years.

That also begs the question “Will this kind of growth damage the exclusivity of the Ferrari brand?”

There are several economists that believe that that could be the case.

The exclusivity of Ferrari is why everyone wants a Ferrari, so if the brand is no longer exclusive, do they have the appeal to continue operating at such a high level?

The exclusivity of Ferrari also accounts for a large portion of its revenue stream, which comes from Ferrari branded apparel and luggage.

If the yellow Ferrari crest is no longer synonymous with wealth will these products still sell?

Ferrari has the pedal to the metal, racing towards its summer IPO, but only time will tell if the 488 GTB will take Ferrari to the winner’s circle or if they will just run out of gas.

A version of this article appeared in the Tuesday, Feb. 10th print edition.

Contact Zack at
zachary.laubernds@student.shu.edu

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s