Ferrari IPO

Ferrari S.p.a is an Italian luxury sports car founded by Enzo Ferrari in 1929. Ferrari road cars are generally seen as a symbol of speed, luxury and wealth. Fiat acquired 50% of the company in 1969, and expanded its stake to 85% in 2008. Earlier this year Fiat announced its intention to sell its share in Ferrari. Piero Ferrari have a 10% stake in the company, while Fiat Chrysler Automotives have 90%.


(Picture: Ferrari Aurea spider)

Ferrari is a strong brand, and the famous symbol of the Ferrari racing team is the Cavallino Rampante (prancing horse) black prancing stallion on a yellow shield, usually with the letters S F (Scuderia Ferrari), with three stripes of green, white and red (the Italian national colors at the top).

Ferrari sold 7,318 units in 2012. The sale dropped down to 6,922 last year, and the revenue was €2,3 billion in 2013. Up 5% from 2012. The company is struggling and in an U.S IPO they hope to raise at least $1 billion.

They struggle to compete with other automakers in Europe and the U.S, and the competition is tough. Tesla have great success with their new electric car with good comfort, technology and over 700 horsepower. Ferrari is also seen as a luxury car with a great vehicle (V8 and V12), but they are struggling. Why?

When you ask people about Ferrari, they think racing cars and especially Formula One, and that is probably an image problem. Formel One and Racing cars is not something for you and me. It`s something for Schumacher. Some people love Formel One and racing cars, but the market is unfortunately not big enough?

Ferrari F430 Spider runs on ethanol, and that hybrid will be in production next year. LaFerrari was put into production this summer. It`s called HY-KERS Concept, and the hybrid system adds more than 100 horsepower on top of the 599 Fiorano`s 612 HP.

The company has produced a number of concept cars such as Ferrari P4/5 and Ferrari SP12 EC, which have been commissioned by wealthy owners. Other quite radical cars is Ferrari Mythos and Ferrari Modulo, but the most recent concept car was produced in 2010, which is Ferrari Millechili.

The special projects program is a collaboration by Ferrari with Italian automobile coachbuilders such as Fioravanti, Pininfarina, and Zagato to build custom cars using selected Ferrari modes as a structural base. The first car under this program is the SP1, commissioned by a Japanese business executive. The second is the P540 Supersfast Aperta, commissioned by an American enthusiast.

Ferrari`s former CEO and Chairman Luca de Montezemolo, resigned from the company after 23 years, and is to be succeeded by Sergio Marchionne, CEO and Chairman of Fiat Chrysler Automobiles, Ferrari`s parent company. Marchionne merged Fiat and Chrysler into the world`s seventh-largest carmaker to better compete with leaders such as General Motors, Volkswagen AG and Toyota Motor Corp.

On 29 October 2014, the FCA group, resulting from the merger between manufacturers Fiat and Chrysler, announced the split of its luxury brand, Ferrari. The aim is to turn Ferrari into an independent brand which 10% of stake will be sold in an IPO next year.

Fiat Chrysler`s brands include Jeep, Fiat, Maserati, Alfa Romeo, Chrysler and Dodge, which all strong brands. They sold about four million cars and trucks in 150 countries last year. Fiat Chrysler declared bankruptcy right after the financial crises in 2009.

Marchionne want to raise cash to cover its expenses and said that the company will spend money on R&D and capital expenditures. The stock rose after the IPO news and Marchionne has stated that he want to increase production to 10,000 cars a year. That`s music in investors ears.

Fiat is putting its jewel on the market.


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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