FERRARI: SHORT

TRADING ON LUXURY MULTIPLE DESPITE BEING AN AUTO

We have been following FIAT and Ferrari closely pre-IPO and played it through FIAT on the long side into the event hype with success.

It IPO’d on a luxury multiple and in fact higher than that given what has happened to luxury multiples this reporting season. This despite being an auto!

Its an auto (bad in this environment) trading on a luxury multiple (which themselves have come into question this quarter).

The bull case is they increase production to 10k cars a year.

The marginal buyer being the Chinese we however have the view that Ferrari will not be able to generate sufficient organic growth in the future.

We are happy to short here and once we see the psychological level of 52 broken (IPO price) we are looking for a PT of $44 as fair value.