One of the most famous sports car manufacturers of all time, Ferrari was founded in 1939 by Enzo Ferrari and is now one of the most recognised brands in the world. The company is renowned for its luxury image and limited sales, producing just 7,000 cars per year, creating a higher demand and sense of exclusivity. Further to this, Ferrari has a storied history in Formula One racing, taking its place as both the oldest and most successful team with 16 championships. Thanks to the exclusivity and luxury nature of the brand, the Ferrari IPO was a desirable prospect for car fanatics, investors and status seekers.

 

In late 2015, the Ferrari IPO attracted investors in a bid to generate $100m to reduce debt and increase investment funding. A 10% stake was available to the public, with a further 80% given to existing shareholders and the remaining 10% for Piero Ferrari.  The shares listed at $52 per share. Making the IPO worth €10bn.

 

With assets of €5bn on the balance sheet and both revenue and profit growing since 2012, the Ferrari IPO  was an exciting opportunity for investors. The shares may have had a rocky start, falling by 40% in Feb 2016 (tech names had more appeal), however since then they have risen by over 300%.  The longevity and stability of the shares has turned them into a very viable investment prospect for fans who wanted to own a piece of such an iconic and well-known brand.

 

The 2018 annual report for Ferrari showed revenues of €3.4bn (flat), with operating profits of €826m (+6.5%) and net profits of €787m (+46%). This means that profit margins grew significantly, meaning costs were well controlled in the face of flat sales. The post-IPO success of shares after the Ferrari IPO may also be down to the success of the Ferrari racing team in competitions and its loyal fan base even though, for many, the brand is built around ultra-high-end products, the high cost of which puts them well out of reach, leaving the shares as the next best alternative.