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Ferrari Share Price Races Higher on Debut

FerrariShares of Ferrari were up 15% in their Wall Street debut reaching $60 per share on Wednesday after the supercar maker based in Italy priced its initial public offering at its upper end of its range amidst heavy demand from investors.

Limiting this offering to just 10% of the company helped its parent company Fiat Chrysler Automobiles to leverage a scarcity factor to squeeze value, which defied the choppy market in the U.S. on which a number of big IPOs have been delayed or discounted in 2015.

FCA, which sold stock in Ferrari based in Maranello, Italy at $52 each, could take in as much as $982 million if an option known as greenshoe is exercised, giving the maker of sports cars a market value by stock of $9.8 billion.

Amedeo Felisa the CEO at Ferrari and Sergio Marchionne the Chairman rang the bell to open the New York Stock Exchange on Wednesday along with Piero Ferrari the son of the founder and John Elkann the Chairman of FCA. Elkann, whose Agnelli family, will be the top investor of Ferrari on the distribution plan of the remainder of the stake of FCA in Ferrari amongst insider shareholders in 2016.

Marchionne, who is the CEO at FCA as well, has sought to position sports car maker Ferrari as a business of luxury goods to win the high-flying trading multiple of businesses like Prada and Hermes.

However, some Wall Street analysts question if the small volume, capital-intensive maker of cars would be able to sustain high valuations beyond its debut in the market.

Proceeds from this offering will help fund the turnaround plan of FCA centered on the revamping of its Jeep, Maserati and Alfa Romeo brands as it attempts to boost its sales to over 7 million vehicles by 2018 and compete with rivals in the premium segment including Audi and BMW.

The pledge of distributing the remaining 80% stake in Ferrari amongst shareholders of FCA has helped lift the shares of the group by over 80% the last year and FCA will raise over $4 billion from the subsequent spin off and this offering. The remaining 10% will be held by Piero Ferrari.

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