By on July 6, 2015

Picture courtesy blogs.reuters.com

Speaking at an unrelated Fiat 500 reveal last week, Fiat-Chrysler chief Sergio Marchionne said Ferrari is worth about $11 billion and he expects the prancing horse’s IPO to garner about $1.1 billion went it goes up for sale in October.

“There are clear expectations from ourselves as Ferrari brand is unique,” Marchionne said, according to Bloomberg News. “There is also a scarcity value as we are just selling a 10 percent stake.”

Marchionne’s estimate is roughly double what brokers said the Maranello-based manufacturer could be worth almost a year ago.

The $11 billion valuation before its October IPO may be ambitious, but so is Marchionne’s overall plan for FCA. He announced the move to spin off Ferrari last year as part of a larger plan to invest $61 billion back into FCA. The sale is made up of a 10-percent offer of Ferrari on the NYSE and a redistribution of FCA’s remaining 80-percent share to the Agnelli family, who also own about 30 percent of Fiat. The non-FCA owned 10 percent of Ferrari will stay with Enzo Ferrari’s son, current Ferrari vice chairman Piero Lardi Ferrari.

When it goes to sale in October, the IPO may raise about $1.1 billion for Ferrari. The company has said it won’t build any more than 7,000 cars per year, wouldn’t change its current business model nor would it be likely that anyone could takeover controlling interest.

That doesn’t mean it’s a bad investment. As a company, Ferrari is wildly profitable and will still sell you a $50 T-shirt if you can’t afford a share in October.

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20 Comments on “Ferrari Worth Over $11 Billion, Says FCA Boss Sergio Marchionne...”


  • avatar
    28-Cars-Later

    FCA’s market cap is $18.15 billion, but Ferrari on its own is worth 11?

    I think Sergio is taking Julie’s pills.

    https://ycharts.com/companies/FCAU/market_cap

    • 0 avatar
      Ihatejalops

      Considering what Tesla is valued (35Billion), don’t you think Ferrari is undervalued? I mean if Tesla is more than half of Ford and Ford sells 1 million F-150’s, what should be Ferrari’s worth considering it’s brand strength besides the selling of autos?

    • 0 avatar
      Lorenzo

      Market cap is set by speculators and investors, and doesn’t represent true value, or even book value. FCA’s cash hoard is more than market cap, because investors know about the underlying debt that exceeds the cash on hand.

      Investors also heed analysts who see what other auto makers do, that FCA has low margins and a product mix that won’t tide the company over in a downturn. All that reduces the stock price and the aggregate market cap.

      In a Ferrari spinoff, the debt stays with FCA, so Ferrari has a clean balance sheet, a profitable business plan that’s probably more than a bit recession-proof, and a Ferrari family member still involved. The $11 billion value is based on getting $1.1 billion in an IPO, and Sergio wouldn’t have said that if he didn’t have IPO specialists telling him that. Initial IPO prices have tended to be much higher than what the stock price will be much later.

      • 0 avatar
        28-Cars-Later

        Nice concise post.

      • 0 avatar
        Ihatejalops

        I understand the valuation. However, with phantom valuations for silicon valley businesses, 11 Billion seems low for a brand that has so much value even with high debt. I’m just comparing the two, similar to how houses use comps.

        The truth is values are all over the place and that Ferrari is certainly worth more than 11B.

        • 0 avatar
          Pch101

          There is a fundamental difference between tech companies and car companies: tech companies have the potential for incredible scale, while car and other old-line manufacturing companies don’t.

          Elon Musk has done a fantastic job of convincing the dumb money that Tesla is a technology company. But it isn’t. No manufacturer can possibly hope to have the kind of margins that a Google can have.

      • 0 avatar
        CoreyDL

        Were you the vacuum cleaner company accountant?

    • 0 avatar
      Lou_BC

      28-Cars-Later – sounds more like hallucinogens as opposed to narcotics.

      Must be on a mushroom diet.

  • avatar
    65corvair

    Sell Fiat-Chrylser, keep Ferrari, Ram trucks and Jeep! Ok give Fiat and Chrysler away.

    • 0 avatar
      whynot

      So in other words, shut down Fiat/Chrysler/Dodge because I don’t believe they could even give Fiat and Chrysler away.

      I think that is the same conclusion that Daimler came up with when they briefly considered offloading Dodge/Chrysler but keeping Jeep.

      • 0 avatar
        Lorenzo

        Well, after Daimler took over a company ten times its size and took its $15 billion cash hoard meant for new models, then its imperious managers drove out the people who had made Chrysler successful, there wasn’t much left. It’s amazing how quickly Daimler did it, when you consider that Chrysler just before the “merger of equals” was making nearly 3 million vehicles a year and had profits it’s last three years (’95,’96 &’97) of over $8 billion combined.

  • avatar
    Pch101

    Selling 10% of the stock is gratuitous. Something like that could be marketed similarly to shares in the Green Bay Packers, which are more about being able to say that you own it than making money from it.

    I suspect that the separation is more about creating accounting profit for FCA, as FCA will be able to “sell” and “lease” services to the new spin out.

  • avatar
    runs_on_h8raide

    Ferrari may be worth more than that. It is the most recognized brand in the world. I forget the study, but I could swear it beat all major brands, Apple, Coke, etc etc.

    Speaking of Apple, I think they’re sitting on 60 billion in cash…can you imagine the earthquake it would cause if they just forked over exactly what Sergio wants? The iFerrari la Ferrari 2s….made in China, designed in Maranello…complimentary iWatch with every purchase.

  • avatar
    Freddie

    “Hello Sharks. I’m asking $1.1 billion for 10% of my company”

  • avatar
    Chocolatedeath

    Only worth 800 million to me. just saying

  • avatar
    CoreyDL

    Give to me one…hundred…BILLION..dollars!

    Muhahahah *pinkie to mouth*

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