theme park in Abu Dhabi, a luxury vacation destination.

Hence, Ferrari is more of a luxury brand because it has high margins, low CapEx because it has just a
handful of different car models, and low inventories.

I don’t agree with the financial forecast described in the Case. There are three reasons against Ferrari’s
assumption.

First, the top line of income statement is optimistic. Although the company will be able to archive
shipment of 9,000 unit by 2019, buoyed by increasing population and rising middle-class in emerging
market, average unite price will not growth as largely as before and rather will decline as sales units at a
lower price will increase in emerging countries and ones at a higher price will decrease in developed
countries. market-multiples valuation and a DCF valuation. Be sure to justify your peer group selection,
choice of multiple (e.g., EV/EBITDA, P/E, etc.), and any assumptions for each valuation approach. Briefly
describe the strengths and weaknesses of a market-multiples and DCF approach in valuing IPOs.

5. In preparation for Ferrari’s listing on the New York Stock Exchange, at what price in U.S. dollars
would you recommend that Ferrari shares be sold? What is your price setting strategy for Ferrari’s IPO?
What are the trade-offs in your pricing strategy?