Ferrari shares jump 15% in first trades

by Bella Palmer

Ferrari shares jump 15% in first trades
Shares of Italian luxury car manufacturer Ferrari started the day trading at $60, 15% higher than their flotation price of $52 per share.

By 1506 BST they were up by an even more tempered 8.12% at $56.22.

On Tuesday, Ferrari priced its initial public offering at 52$ per share, towards the top part of the proposed valuation range.

That gave the Maranello-based firm a theoretical market capitalisation of approximately $9.8bn (£6.36bn).
In the run-up to the company’s debut on the New York Stock Exchange some analysts argued the company should be valued like luxury goods makers – at least in terms of EV/EBITDA multiples.
That meant that in terms of expected EV/EBITDA the firm could more or less justify a multiple of about 12.2, versus 5.9 for the global car industry. That was because the median EV/EBITDA for luxury brands was 11.2.
However, some market commentators highlighted the 5.6% drop in car shipments recorded in the first quarter as a counterargument against a premium valuation.
The firm’s Dutch registration and the fact that its main shareholders Exor – the investment vehicle for the Agnelli family, which is also the biggest investor in Fiat – retain the majority of the political rights also raised some eyebrows.
Nevertheless, Fiat Sergio Marchionne’s announcement of his intention to list the 10% stake in Ferrari back in October 2014 was seen as a contributing factor to the outperformance in Fiat’s share price since then.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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