• Apr 19, 2011
The Ferrari brand is among the most exclusive and revered in the world, but how much is it worth? Bloomberg reports that Fiat CEO Sergio Marchionne feels the Prancing Horse is worth more than 5 billion euros, or $7.3 billion in U.S. dollars. That's a big chunk of change for an automaker that cleared only $430 million in 2010 on sales of $2.73 billion, and the total represents 63 percent of the entire Fiat group's estimated worth of $11.4 billion.

The reason for Marchionne's high valuation of the Italian exotic car maker is its "sacred brand" status. Like an NFL team that sells for $1 billion only to average $20 million in profits per year, Ferrari is so highly regarded that it could sell for well beyond its cash-generation capabilities would indicate. If Ferrari were valued at $7.3 billion, that would be 17 times its annual earnings. Luxury brands average about 12.7 times annual earnings.

Marchionne has every reason to value his prized property as high as possible, but analysts and banks don't seem to agree with the CEO's assessment. Estimates are that Ferrari is worth about $4.3 billion. But at the same time, banks appear very eager for Fiat to issue an IPO for Ferrari, which could be an indication that there is serious money to be made.

Fiat has mentioned the possibility of offering an IPO for Ferrari as a way to generate cash and eliminate debt, though the automaker claims no decision has been made to put up the brand for public sale.

In other news, Marchionne told Bloomberg that he has put in an order for a white Ferrari FF. Yeah, we can see why Marchionne places a high value on the Ferrari brand. It's good to be the CEO.



Photos copyright ©2011 Lorenzo Marcinno / Carrstudio / AOL

[Source: Bloomberg]


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 10 Comments
      rmkensington
      • 3 Years Ago
      And their F1 team is worth about $3.50.
      M.
      • 3 Years Ago
      that valuation is drunk and mad. to me, a brand is worth a premium over the industry multiple only if it allows you to win incremental business. In the late 90's, Apple, with the success of the iMac, created a brand centered on unique, simple aesthetics and ergonomics. They proceeded to leverage that brand in creating new product lines and expanding their business dramatically. Ferrari can't do this. What new business will the brand win? Everyone knows what Ferrari represents, and despite Ferrari's insistance on putting its logo on cheesy, ancillary knick-knacks, their only product line always was, and will be, sports cars. Ferrari is a mature business, with its brand well at the point of saturation. The growth of the business will henceforth depend on new and better products, and successful penetration of new business segments. This is the same reality for any other established automaker, so Ferrari should be valued similarly. Another question in my mind concerns the ability of Ferrari to maintain it's profit margin as a standalone entity, without the benefit of the corporate mothership. That, however, is a wholly different matter.
      • 3 Years Ago
      [blocked]
        ConceptVBS
        • 3 Years Ago
        I guess your not familiar with the concept of intangible assets (trademarks, brand name, patents, copyrights etc.) Some companies, their intangible assets are worth more than their tangible assets (profits, cash, assets, retained earnings).
          • 3 Years Ago
          @ConceptVBS
          [blocked]
      Hazdaz
      • 3 Years Ago
      While I agree that there will be many that place a premium on Ferrari stock simply because of the name, Marchionne is crazy if its going to be valued at that much (at least not in the long run after some initial surge). Put that in perspective, Ford's market cap is only 7.5X that of what Marchionne thinks Ferrari will be valued at. Maybe if it was some fast-moving hi-tech company (like an internet company or something along those lines), I could see them warranting a price 17X its earnings, but not a car company. Manufacturing is definitely more old-school, more established (which usually means less growth) industry. Ford's P/E, for instance, is less than 9 and that's a very realistic number.
      xcatchmyshadowx
      • 3 Years Ago
      ferrari of the past : great! ferrari of today: overrated!
      • 3 Years Ago
      [blocked]
      throwback
      • 3 Years Ago
      "Marchionne told Bloomberg that he has put in an order for a white Ferrari FF" What no Chrysler 200 imported from Detroit?
      • 3 Years Ago
      [blocked]