Ferrari Stock Races in First Day of Trading
Fiat Chrysler Automobiles chief Sergio Marchionne rang the opening bell Wednesday for Ferrari’s first day of trading on the New York Stock Exchange and shares of the supercar maker soared.
The stock, which was up as high as $60 per share, leveled off around $57 in mid-day trading.
“This is not really a car, it’s a unique expression of art and technology,” Marchionne told Bloomberg.
The initial price offering for Ferrari was “well oversubscribed” before it opened at $52, according to reports. Shares of former-parent FCA dropped by 5 percent as investors anticipated a higher price for Ferrari.
The IPO raised roughly $900 million for the carmaker, whose valuation was roughly $10 billion before trading. Ferrari offered 10 percent of the company on the trading floor, with the remainder of the company staying with Fiat family owners and Ferrari scion Piero Ferrari — who is now a billionaire.
Ferrari’s public sale is part of Marchionne’s overall plan to raise capital to invest back into FCA cars.
In its prospectus, Ferrari announced that it would increase production of its cars from 7,000 cars per year up to 9,000 cars in 2019.
It’s up to Ferrari to continue the growth on its own. Unlike luxury carmakers Rolls-Royce and Bentley, Ferrari doesn’t have any plans to produce an SUV any time soon, rather it plans to peg its future profitability on the brand rather than the cars.
“What is at the heart of the brand is this intimate relationship between us and the customer base,” Marchionne told CNBC. “Therefore it would be almost suicidal to try to expand volumes to the detriment of that relationship.”
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Watch this soar and then crash to the 40s.
With only 10% of the company being sold, there is almost no chance of making any money any time soon. A large portion of buyers are people who want a stock certificate to hang on the wall.