Ferrari Case Questions

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Apr 3, 2024

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Corporate Financial Policy MGT 6432 Case 5: “Ferrari: The 2015 Initial Public Offering” UV7259 (Darden Apr. 14, 2017) You are the lead underwriter for Ferrari’s IPO. Answer the following question: 1. What are the financial implications of Ferrari’s current strategy? What are the benefits and cost of going public for Ferrari? 2. Evaluate Ferrari’s performance relative to its peers. Which peers are a more appropriate comparison, auto manufacturers or luxury brands? Why? 3. Do you agree with the financial forecast in Exhibit 8? If so, why? If not, what specific concerns do you have? 4. What do you think Ferrari is worth in euros? Justify your estimate based on current market-multiples valuation and a DCF valuation. Be sure to justify your peer group selection, choice of multiple (e.g., EV/EBITDA, P/E, etc.), and any assumptions for each valuation approach. Briefly describe the strengths and weaknesses of a market-multiples and DCF approach in valuing IPOs. 5. In preparation for Ferrari’s listing on the New York Stock Exchange, at what price in U.S. dollars would you recommend that Ferrari shares be sold? What is your price setting strategy for Ferrari’s IPO? What are the trade-offs in your pricing strategy?
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