How much is Ferrari worth?
Fiat Chrysler caused a stir last Wednesday when it announced it would be selling off its 90% share of Ferrari. The IPO isn’t expected until next June, but the announcement has already sparked the question, how much is Ferrari worth?
The answer is complicated, as are the definitions and formulas involved in figuring out the price of a luxury car company like Ferrari.
Ferrari Chairman Sergio Marchionne places estimates at around 12 billion euros, on a good day at least. He came to this estimate by claiming Ferrari was a luxury goods company and its worth should be figured as such. Luxury goods companies figure their worth at about 9-12 times EBITDA, or earnings before interest, taxes, depreciation and amortization. Marchionne expects Ferrari’s EBITDA to exceed 1 billion euros placing the worth of the company at 9-12 billion euros.
Others are not so sure, and don’t necessarily agree with Marchionne on his label of the company.
Luxury car companies’ worth is often determined differently than luxury goods. Their equation is twice the company’s revenue. Ferrari’s revenue is at about 2.33 billion euros, making Ferrari worth about 5-5.5 billion euros.
Christina Church of Barclays Research believes in a compromise, calling Ferrari a part luxury carmaker, part luxury goods makers and places the company’s value at 8.7 billion euros.
Experts have approximately eight more months to debate the worth of Ferrari before the company is up for sale, but the answer is far from simple. Luxury automakers are a hot commodity and Fiat Chrysler is going to sell at the highest possible value. Only time will tell how much Ferrari is worth.
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