Why the Fiat Chrysler Stock Price Is Up 35% This Year (NYSE: FCAU)

The Fiat Chrysler stock price is up 35% this year, compared to a loss of nearly 5% for the Dow Jones Industrial Average in the same time.

cryslerOne reason for the soaring stock price has been Fiat Chrysler's fastest annualized pace of U.S. vehicle sales in more than a decade. Particularly, Jeep sales have impressed investors.

But recently, the upcoming Ferrari (NYSE: RACE) IPO is also driving shares higher.

Fiat Chrysler Automobiles NV (NYSE: FCAU) reported Monday it will be selling a 10% stake in the luxury sport brand through the Ferrari IPO.

The initial public offering price has been set between $48 and $52 per share. That values Ferrari at $9.8 billion. Shares will begin trading on Wednesday, Oct. 21.

After the IPO, Fiat Chrysler will own about 80% of Ferrari. The Ferrari family will hold the remaining 10%.

The point of the Ferrari IPO is to distinguish the luxury brand from its mass-market parent. The deal will also raise money to support Fiat Chrysler's growth plans.

Last year, Ferrari shipped just 7,255 cars. That limited number, however, is part of Ferrari's approach of promoting exclusivity. Still, as Ferrari noted in its IPO filing under potential risks, this low-volume strategy also caps revenue and profit growth.

In the six months through June, Ferrari's net revenue rose 2.8% year over year. Net profit increased 10%, according to the filing.

While Ferrari's sales are limited, Fiat Chrysler is enjoying a banner year. And that's helped the Fiat Chrysler stock price post double-digit gains when the broader markets have fallen...

Healthy Auto Sales Drive Fiat Chrysler Shares Higher

Fiat Chrysler sold 193,019 vehicles in September, a 14% year-over-year increase.

Jeep sales jumped a hefty 40% last month. Led by a record volume for Cherokee, Fiat Chrysler's sport utility models had their second-best month ever...

"On the back of a strong sales industry we were able to achieve our best September sales in 15 years and our 66th-consecutive month of year-over-year sales growth," Reid Bigland, head of the company's U.S. sales, said in a statement.

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Auto sales overall rose more than expected in September amid low gas prices, cheap credit, and abundant Labor Day sales. New technologies are also boosting new vehicle sales.

The U.S. annualized rate in September reached the fastest pace since June 2005. Some 18.2 million vehicles left lots last month, according to Autodata.

Vehicles sales are robust because "it's cheap to run 'em, it's cheap to buy 'em, and there's more people with jobs, so more people need 'em," Managing Director for Consultant AlixPartners Mark Wakefield told Bloomberg. "$98 billion has gone into people's pockets [year to date] strictly because of gas prices going down. You're seeing the impact of that."

An improving economy and low gas prices have helped the Fiat Chrysler stock price climb 35% this year. In the last month alone, the FCAU stock price is up more than 10.5%.

The highly anticipated Ferrari IPO will likely be another catalyst that drives Fiat Chrysler shares higher still.

Here's everything you need to know about the Ferrari IPO, including whether you should buy Ferrari stock...

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