Ferrari SpA (NYSE: RACE) Starts Trading On Wednesday, 21 October
$RACE
Ferrari SpA (NYSE: RACE) stock starts trading on Wednesday, 21 October. The Ferrari IPO plans to raise $860-M by selling 17.2-M/shares in the 48 to 52 range. At the high end of the range the valuation will be $9.8-B
The Ferrari IPO valuation is 33X larger than the company’s total earnings in Y 2014. Some traders believe that’s way too high for a car company.
Ferrari believes it can live up to its valuation. That is because it’s repositioning its Top brand before the IPO.
The reason for the huge Ferrari IPO valuation is the company’s multi-generational luxury brand..
About 57% of Ferrari’s non-current assets – a company’s long-term investments or materials – consist of brand value. These are listed as “goodwill” and “intangible assets” on the balance sheet. Both items include the value of a company’s name, copyrights, patents, and intellectual property.
Ferrari believes its luxury brand power will fuel future growth and expand sales operations.
Although it is profitable, Ferrari re-branded in order to make up for slow revenue growth. From Ys 2012 to 2013, the company’s revenue increased only 5% to $3.2-B, as it caps annual sales at 7,000 units.
With a valuation built on a non-tangible brand, traders are wondering if they should buy Ferrari stock when it starts trading on 21 October.
I believe it is, and it will be a good stock to trade Quarterly into earnings, and a good stock to own long term.
Stay tuned…
HeffX-LTN
Paul Ebeling
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