Recently spun-off Ferrari boosted earnings during the third quarter—its first since becoming a public company—but the perky results weren’t enough to appease early investors who paid a premium for bullishly priced shares.
The company’s shares are lower today (Oct. 28) on the news that Ferrari’s third-quarter profit, before interest, tax, depreciation and amortization, rose 22%.
Parent company Fiat Chrysler sold 10% of Ferrari in an Oct. 21 IPO. The shares (ticker: RACE) listed at $52, the top end of the range, and quickly reached $60, putting its multiple well ahead of that of the average car company, and more in the league of a luxury goods company like Hermes or Prada.
Now Ferrari needs to prove that the valuation is justified. At the moment, investors and analysts don’t seem convinced.