The Ferrari IPO will go live Wednesday, however some stock exchange experts aren’t entirely convinced the stock is as strong as predictions say it is. CNBC’s Bob Pisani recently ran an op-ed on the sale, saying the automaker’s insistence that the rich will only get richer in coming years doesn’t put it on the most stable of grounds.
Ferrari’s numbers are “stellar,” CNBC says, however it’s relying on two factors to keep its stock strong in coming years. The first is that the brand will become increasingly appealing to wealthy people and will appeal to a growing number of ‘high networth individuals.’ The second is that the income of the ultrarich will continue to rise for a long time to come.
The majority of these predictions surround the rich in the Asia-Pacific region, not surprisingly. CNBC says “anyone who is looking at China,” would notice a sharp slowdown in the purchasing of luxury goods in the country as of late, so they should take Ferrari’s assumptions with a “grain of salt.”
Additionally, Ferrari says it can increase the number of vehicles it sells annually from 7,000 to over 9,000 while also boosting profits and maintaining the levels of exclusivity it’s known for. Not all stock market experts are convinced, saying you can aim for low growth with high exclusivity and high prices or high growth with low exclusivity and low prices, but you cant have both. Ferrari says it can, and they just may be right.
Ferrari is unlike other automakers, and even other luxury automakers. The brand is already established as a luxury clothing and accessories brand and has Ferrari stores all over the world to sell the merchandise, so it should be viewed as a luxury goods brand like Hermes, not just an automaker. There’s also plans to build more Ferrari theme parks like the one currently operating in Abu Dhabi.
Ferrari’s IPO is creating a whirlwind of differing opinions on Wall Street, but the real test of the stock’s strength is yet to come. Fiat-Chrysler is selling just 10 percent of its stake in the automaker Wednesday, but will dump the remaining 80 percent of the stock on the market in January and no matter how you spin it – that’s a lot of shares all at once.