Case Studies in Finance – Week 4
Week 4 Discussion Case
Case 46 – Ferrari: The 2015 Initial Public Offering
This case examines the October 2015 initial public offering pricing decision for legendary Italian sports car company Ferrari by Fiat Chrysler (FCA) management. You will model the value of Ferrari in light of Ferrari Chairman Sergio Marchionne’s interest in expanding production despite the company’s long-standing tradition of a severely limited-production strategy to maintain an exclusive brand image. The case is designed to showcase corporate valuation using discounted cash flow (DCF) and peer-company market multiples for a company that exists in two sectors: automotive and luxury goods.
Structure your discussion around the following key questions:
What are the financial implications of Ferrari’s current strategy?
Do you agree with the financial forecast in Exhibit 8? If so, why? If not, what specific concerns do you have?
How much do you think Ferrari is worth in euros? Describe in detail how you would estimate Ferrari’s value. For instance, would you recommend using a current market-multiples valuation? A discounted cash flow (DCF) valuation? A different method?
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?
Please post directly to the discussion board; do not only upload an attachment. Case_46_Ferrari_F1775X.xlsx
You may include supplementary attachments if they help support or illustrate your position.
The attached spreadsheet may also be helpful to you.
Be sure to comment on the work of at least two classmates and any posts from your instructor.