Sergio Marchionne’s readying the Italian carmaker for its independence in 2015. The stock, no matter the price, is bound to be cheaper than its LaFerrari
Although the Ferrari IPO isn’t happening until sometime later next year it might be a nice gift IOU to yourself this Christmas. At $1.4 million, the LaFerrari will cost you almost $2,000 per horse. Alternatively, you can purchase a whole bunch of Ferrari stock without breaking the bank.
Why buy this IPO when so many fail miserably
in the first 12-24 months?
Have you looked at this car? Owning a piece of one of the world’s most prestigious car companies is an opportunity that doesn’t come around too often. Sure, you can buy the First Trust NASDAQ Global Auto Index Fund
(CARZ), which owns companies like Daimler and BMW, but unless the index the fund tracks adds Ferrari, you’re out of luck.
Besides, it’s not nearly as impressive dinner party banter. “Hey, I own shares in CARZ, the world’s only automobile ETF” is not the same as “I’m a part owner in Ferrari.”
How much will it cost you? That depends.
The head of Fiat and Chrysler believes the pride of Italy could be worth as much as $14 billion. Analysts estimate the true number to be lower by as much as half. On the flipside, many perceive Ferrari to be a luxury brand in the same vain as Hermes, Louis Vuitton or Cartier.
Hermes’ enterprise value is 21 times EBITDA. As an independent company Ferrari could increase the number of cars produced annually by as many as 3,000 to meet the growing demand for luxury brands around the world. If Ferrari produces 10,000 cars its EBITDA could top $1.4 billion, which puts its valuation at almost $30 billion based on Hermes.
Who’s right? That’s the million-dollar question.
But hey, if you’re a car geek, owning Ferrari stock is a pretty cool consolation prize.