NEW YORK (AFP) - The legendary Italian racing car Ferrari brought its trademark roar to Wall Street on Wednesday (Oct 21) and fans followed suit, its shares easily overtaking the IPO price.
The New York Stock Exchange was decked out in the Ferrari's trademark red and crest of a prancing horse, while loudspeakers let loose earthshaking vrooms the iconic supercars are known for.
Ouside on the street, crowds flocked to see eight of the supercars, including driver Sebastien Vettel's F1 model, a 1961 model worth US$15 million, and one of the hottest new models, the US$1.4 million hybrid LaFerrari.
Trading under the ticker name "RACE," the shares, which were sold at US$52 apiece in an initial public offering on Tuesday by parent Fiat Chrysler, broke past US$60 as trade opened, but with the overall market sinking, they settled back to close with just a 5.8 per cent gain at US$55.
That was nevertheless a respectable debut in a market which, in recent weeks, has greeted new issues tepidly.
"Just about every other IPO is falling flat, so any incremental gain has to be taken as a positive," said Jack Ablin of BMO Private Bank.
For Ferrari, though, the reception gave the company, which delivered just over 7,200 cars last year, a rich valuation of over US$10 billion.
That proved to be a financial boost for Fiat Chrysler, which was selling off a nine per cent stake in its racecar subsidiary as it seeks cash to pull down debt and to invest in expanded production.
Ferrari's debut was the top financial news of the day, and drew fans outside the exchange to see the lineup of supercars on display, testament to the value of its global brand.
"I love Ferrari. I've always followed them with the Formula One racing," said Abhishek Ahuja, a tourist visiting New York from Mumbai.
Fiat Chrysler chief executive Sergio Marchionne, who also serves as Ferrari's chairman, found it hard to contain his happiness at the success of the IPO, especially given the doldrums of recent US stock trading.
Sporting his trademark cashmere cardigan, he and other Ferrari executives rang the bell to open the New York exchange's trading session Wednesday.
But it was not all good news. Fiat Chrysler's shares quoted on the New York exchange were down 3.9 per cent, perhaps in reaction to Ferrari's shares not having risen even higher.
Fiat Chrysler owned 90 per cent of Ferrari before Tuesday's flotation of a nine percent stake; Piero Ferrari, son of legendary founder Enzo Ferrari, has ten per cent.
With a heavy debt level and a plan to invest US$48 billion to expand its total worldwide sales to seven million vehicles per year, Fiat Chrysler hopes to strengthen its finances by eventually spinning off more of the sports car maker.
The challenge is for Ferrari to build on its strengths amid an increase in competition from an expanding choice of US$200,000 to US$2 million supercars, like those from McLaren, Bugatti, Lamborghini, Aston Martin, and others.
Mr Marchionne told CNBC TV that the company is planning to ramp up sales modestly from slightly over 7,000 units a year to 9,000 by 2019, not so much as to undermine the brand's air of exclusivity.
"What is at the heart of the brand is this intimate relationship between us and the customer. It would be almost suicidal to try to expand volumes to the detriment of that relationship," he said.
As for the competition, they "are not at par with a Ferrari," he added without mentioning names.
Next to the queue of Ferraris outside the exchange, Doug Kendora, who works nearby, voiced his doubts.
Ferrari's introduction to the stock market "will make it less of a boutique (car), more mass. That's the way the world goes, everybody's trying to cash out."