The Ferrari IPO price range is $48 to $52 a share. The company has also announced it will list on the New York Stock Exchange under the ticker "RACE."
The deal is one of the most anticipated offerings of 2015, because Ferrari is one of the most luxurious auto brands in the world.
With the Ferrari IPO price officially set, here's everything you need to know about the deal - including whether or not you should buy Ferrari stock when it hits the market...
Your Ferrari IPO Questions Answered
When is the Ferrari IPO date?
Shares of Ferrari SpA (NYSE: RACE) will price on the evening of Tuesday, Oct. 20. RACE stock will start trading on Wednesday, Oct. 21.
How much money will the Ferrari IPO raise?
Ferrari will sell 17.2 million shares. At the midpoint of the Ferrari IPO price range, the deal will raise $860 million.
The IPO is a spin-off of Fiat Chrysler Automobiles NV (NYSE: FCAU). According to the U.S. Securities and Exchange Commission filing, Fiat Chrysler is only selling 10% of Ferrari during its IPO. FCAU shareholders will own 80% of the rest of the company and Piero Ferrari - son of founder Enzo Ferrari - will own the remaining 10%.
How much is Ferrari worth?
Following the IPO, Ferrari will command a valuation of roughly $9.4 billion. That's slightly higher than Renault's $9.0 billion valuation and lower than Porsche's $11.4 billion.
What kind of company is Ferrari?
Ferrari is one of the most prestigious car brands in the world. The line of Italian vehicles range from $188,000 to upwards of $500,000. A 1962 Ferrari 250 GTO was sold for $35 million in 2012, making it the most expensive car ever sold.
The company keeps its products exclusive by capping annual production at 7,000 vehicles. That strategy ensures demand always outpaces supply.
"There are clear expectations from ourselves as Ferrari brand is unique," said Sergio Marchionne, CEO of Fiat Chrysler, at a presentation in Turin, Italy, on July 3.
Here's how Ferrari's unique sales strategy has boosted revenue since 2012...
How much money does Ferrari make?
After selling a record 7,318 vehicles in 2012, the company decided to cap annual sales at 7,000 units. It sold 6,922 cars in 2013, down 5.4% from 2012.
Despite lower sales, Ferrari's revenue increased 5% year over year to 2.3 billion euros ($3.2 billion). Its net profit was also up 5.4% to 246 million euros ($338.5 million) over the same period. The extra revenue came from costly personalization done on the cars.
The company said in its IPO filing it plans to expand sales into larger markets in China and other parts of Asia. However, government approvals and other federal restrictions could hinder sales growth in those regions.
"If our international expansion plans are unsuccessful, our business, results of operation and financial condition could be materially adversely affected," the IPO filing read.
Who are the Ferrari IPO underwriters?
The joint underwriters for the deal are UBS Group AG (NYSE: UBS), Bank of America Merrill Lynch, Allen & Company, Banco Santander, BNP Paribas, JPMorgan Chase & Co. (NYSE: JPM), and Mediobanca.
How have competitors performed recently?
The Ferrari IPO hits the market when auto stocks are volatile in the wake of Volkswagen AG's (OTCMKTS ADR: VLKAY) diesel scandal.
On Sept. 21, Volkswagen stock crashed 20% after company officials admitted the German automaker cheated on U.S. emissions tests. Regulators found the diesel models emitted more than 40 times the acceptable amount of nitrogen oxide.
From Sept. 21 to the end of the month, European car companies lost a combined $50 billion in market value. Paris-based Peugeot SA (OTCMKTS ADR: PEUGY) and Fiat Chrysler stock fell 14% and 9%, respectively.
With all of the volatility recently, investors are wondering if they should buy Ferrari stock when it starts trading next week. Here's what investors need to know before investing...
Should I buy Ferrari stock?
With its solid revenue growth and strong brand recognition, Ferrari stock could become a strong addition to your portfolio down the road.
But we recommend waiting until after the Ferrari IPO to consider buying shares of the company. That's because retail investors like you and me can be cheated out of profits during the IPO process.
You see, IPOs only benefit institutional investors willing to buy large quantities of a stock before its debut. These Wall Street insiders provide the companies huge gains on their first day of trading, which leads retail investors to think they can snag most of these profits if they jump in right away.
Frequently, new investors will rush into a new stock following an IPO, which drives the share price higher. But if you buy in at that point, you're buying at an inflated price. You also end up missing out on the gains the wealthy Wall Street investors already snagged.
When the price settles back down after the initial frenzy, many of the retail investors who got in late are looking at a loss. This disadvantage can cause massive losses for traders like us who aren't hedge fund managers or big-time investment bankers.
"The IPO process is now a rigged game - one in which the founders, the early angel investors, venture capitalists, and the investment bankers all make out like bandits," explained Money Morning Chief Investment Strategist Keith Fitz-Gerald. "They don't give a rat's you-know-what about whether you make money."
If you want to invest in Ferrari stock, it's best to wait at least two quarters. That way you can analyze several earnings reports and avoid initial volatility.
Alex McGuire is an associate editor for Money Morning who writes about upcoming IPOs. Follow him on Twitter for the biggest news on the Ferrari IPO.
There's A Lot More Where Ferrari Came From... Ferrari is just one of several huge IPOs set to hit the stock market over the next few months. One of them could raise more than every deal in July and August combined. Here are the five most anticipated IPOs to watch in the fourth quarter...