How Much is Ferrari Really Worth?

Industry News

Well, it's kind of up for debate at the moment.

Late last month, newly self-installed Ferrari boss Sergio Marchionne announced plans to sell off ten percent of the Italian supercar maker in an effort to raise some much needed capital to fund future Fiat-Chrysler products. The remaining 90 percent stake will be given to the rest of its own shareholders. Think of it as a corporate bake sale, only without the brownies and cookies. Doubtless this is a plan that former Ferrari chief Luca de Montezemolo wouldn’t have approved of. Perhaps that’s part of the reason why he’s out of the job.

Anyway, the question now is for analysts to try and figure out just how much Ferrari is worth before the IPO next June. To help them out (read: influence them), Marchionne has stated that he believes Ferrari "is worth as much as 12 billion Euros on the open market." Some industry analysts put the price tag at roughly 5 - 5.5 billion Euros based on the company’s revenue of 2.33 billion Euros and multiplying by two. So how the hell did Marchionne come up with his figure? He claims that Ferrari's value needs to be calculated with the formula commonly used for other luxury products. That’s basically nine to twelve times earnings before interest, taxes, depreciation and amortization (EBITDA).

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Last year’s Ferrari EBITDA was 650 million euros, making it worth somewhere between 5.85 billion and 7.8 billion Euros. Now consider this: Marchionne predicts Ferrari’s eventual EBITDA to exceed 1 billion euros, hence a valuation of 9 billion to 12 billion Euros. A little too bullish on Marchionne's part or is it the analysts being bearish? We'll find out this June.