1.

Ferrari’s IPO Performance

Ferraris’s stock posted a strong performance on the IPO date. The FCA priced the
stock at $52. The stock surged 15% opening trading on 21 Octobrer 2015 at $60
(Finance.yahoo.com, 2021). There was a a hype around the IPO and many investors were
yearning to invest in one of the most famous luxury brands. Mot media reports indicated that
Ferrari’s IPO was oversubcribed, and the underwriter and FCA even contempltaed raising the
official IPO price to $53 from the initail price cap of $52 (Finance.yahoo.com, 2021). As
shown in Figure 2 below, Ferrari had a disappointing performance after the IPO. The stock
plumented and closed the month of October at $50.43, 8% lower than the opeining price.
Figure 2 shows that the stock continued to plumemnt in the first four months post-IPO. This
fall is attributed to the fact that the company’s growth could not match the expectations
created by the IPO hype. Ferrari, being a luxury model, could not grow rapidly. Selling few
cars at higher prices is its businesss model, that ensures it maintains the luxury brand status.
In 2015 before the IPO, Ferrari sold only 7,000 cars far lower than Toyota and General
Motors that sold more than 2 million cars.
Figure 1: Ferrari's Short-term IPO Performance

Ferrari's Stock Performance

60

55

50

45

40

35

30

Data obtained from (Finance.yahoo.com, 2021)

Ferrari’s shares plummeted further in 2016 to the lowest of $32 in February 2016,
following economic slowdown in China (Flak, 2016). It implies that that in just four months,
the stock had lost almost half of its IPO value. China was and still a critical emerging market
for the company’s products. Despite the fall in stock market price, Ferrari was still making
profits of almost $80,000 per car and outperforming its peers in the automotive industry as
well as luxury brands. AS shown in Figure 3 below, Ferrari’s long-term stock performance
has been impressive. The stock has surged from the lowest of $32 in February. In just twelve
months from February 2016, the stock rose by 104% to $65.44. The stock is currently (1
December 2021) trading at $256, which is 394% higher than the IPO price
(Finance.yahoo.com, 2021). The strong stock performance is attributed to its strong financial
performance.
Figure 2: Ferrari's Long-Term Stock performance

Ferrari's Long-term Stock Performance

300

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50

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5 6 6 6 6 6 7 7 7 7 7 8 8 8 8 8 9 9 9 9 9 0 0 0 0 0 1 1 1 1
01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 02 02 02 02 02 02 02 02 02
2/2 7/2 3/2 7/2 9/2 2/2 9/2 4/2 9/2 1/2 4/2 1/2 7/2 9/2 3/2 7/2 3/2 0/2 5/2 6/2 0/2 6/2 1/2 4/2 7/2 1/2 9/2 1/2 5/2 9/2
/2 1/ 3/2 6/ 8/1 11/ 1/1 4/ 6/1 8/3 1/1 1/3 4/1 6/2 9/1 1/2 2/1 4/3 7/1 9/2 2/1 2/2 5/1 7/2 10/ 2/2 3/ 5/2 8/ 0/1
10 1 1 1 1 1

Data obtained from (Finance.yahoo.com, 2021)