Ferrari Demand Moving at High Speeds

If you own a Ferrari, the branding sends a message that goes beyond four wheels, but a status symbol. On October 21, investors will get a chance to jump in this ride via the company’s IPO.

Ferrari N.V. (Nasdaq: RACE)  will offer 17.2 million shares at an initial range of $48-$52 for roughly 9% of the company that would value ‘RACE’ near the $10 billion dollar mark.

As you would expect, Ferrari is much more than a car company. They describe themselves in their prospectus as among the world’s leading luxury brands focused on the design, engineering, production and sale of the world’s most recognizable luxury performance sports cars.

Ferrari indeed wants to be priced in the high-flying luxury good sector with multiples that would compare to those of Prada and Hermes.

The parent company, Fiat Chrysler Automobiles (NYSE: FCAU), will sell up to 10% of its stake in Ferrari but still have an 80% stake in the company after the offering.

How is Ferrari faring on the open roads of the IPO roadshow? ‘RACE’ certainly has investors more than ‘test-driving’ the deal.

“Demand for Ferrari is being regarded as ‘very-good to excellent’ from those coming out of the road-show in New York,” senior managing partner at IPO Boutique, Scott Sweet, said.  “Like most Ferrari brand products, we have heard the company is shopping the deal to a select few and even ‘brand-loyal’ customers. IPOs with high-global-brand awareness often come out of the gates strong.”

Exclusivity and status remain Ferrari’s biggest selling point — but what does that mean for the company’s growth strategy?

The company has a ‘controlled growth strategy’ which could see car shipments grow from 7,255 shipments last year to 9,000 in 2019. Flash numbers from the latest quarter show growth that is stronger than the historic trend with net revenue coming in roughly 9%-10% higher than the year-ago period.

UBS Investment Bank and BofA Merrill Lynch are the lead book-runners on the ‘RACE’ deal with Allen & Co., Banco Santander, BNP PARIBAS, J.P. Morgan, Mediobanca rounding out the list of co-managers.

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