Amidst a brutal environment for IPOs, Fiat Chrysler’s(FCAU) IPO of 10% of Ferrari(RACE) seems to have bucked the trend. The IPO priced at $52, at the top of the $48 to $52 range, in the face of strong demand. At this price, Ferrari will have a market capitalization of nearly $10 billion. With a small float of just 10%, and a luxury brand that everyone wants a piece of, the stock may keep moving up. CNBC’s Bob Pisani explains why this IPO is not indicative of the overall IPO market.
Early next year, Fiat Chrysler will spin off its remaining 83% stake in Ferrari to shareholders, flooding the market with additional shares. In the meantime, an arbitrage opportunity may develop between the hot Ferrari and the staid Fiat Chrysler.
Disclosure: The author holds no position in any stock mentioned