This is the 2016 488GTB Turbo by Ferrari…
It is sexy and goes fast…
The car will hit 62 mph in three seconds and 124 mph in 8.3 seconds.
According to Car & Driver:
The new engine is smaller than its predecessor, and its displacement of 488 cubic centimeters per cylinder gives the car its name: 488GTB. Multiplied by eight, that works out to 3902 cc for the new 90-degree V-8, which is mated to, as was the 458’s V-8, a seven-speed dual-clutch automatic. Despite the 0.6-liter reduction in displacement, the new engine makes more power: 661 horsepower at 8000 rpm, versus 597 horsepower at 9000 rpm for the 458 Speciale. Torque, predictably, is greater as well, reaching 561 lb-ft at a low 3000 rpm.
At 155 mph, the downforce generated by its airflow management elements will suck it onto the track with 717 pounds of force.
It’s Money
There is no price tag put on the 488GTB yet, but its predecessor, the 458, cost $243,000 — so add a few bucks on that.
Of course, you can’t just run out and buy one. There will only be 9,000 total Ferraris built in 2016 — up from 7,000 in 2014. And if you want to be on the list to own a new model, you have to be well loved by your local dealer. That means you have to buy a lot of super-cars, pay a large amount up front, and have compromising pictures of the auto dealer to add to your leverage.
Best Brand in the World
As you probably know, Ferrari went public in November 2015 and quickly topped out the first day at $60.97. The share price has been dropping ever since.
Not only was the timing bad due to the deteriorating global economic picture, but the company came out too high to begin with.
We see this pattern a lot. A recent popular example would be Facebook (NASDAQ: FB). The stock had an initial public offering (IPO) on May 18, 2012. And it pretty much went straight down right after that.
You see, insiders who own IPO stocks are contractually obligated due to SEC regulations to hold their stock for at least six months after the stock starts trading. The company gets all of the hype, goes public, and starts trading at the top of its greed range. After all, the people selling the stock want the most money they can get.
After some of the hype fades, those hoping to flip the stock do so or go on to greener pastures. Professionals, who know that the six-month selling pressure from the unlock date will push the share price down, won’t buy in the face of future selling. This means that when the insiders can sell, it is already priced in. You always want to buy a recent IPO about six months after the IPO date.
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Checkered Flag
In terms of Ferrari, the company initially offered 17,175,000 shares. However, total shares outstanding are 188,921,600. On April 18, these will be available to be sold. Many investors will sell shares now to avoid holding the bag in two months.
But a funny thing happens with stocks. Insiders aren’t stupid. They won’t dump shares at the lows. In fact, the new liquidity means that large funds can start buying.
So, if you want to own Ferrari — and who wouldn’t? — the company has a forward P/E of 23, $3.12 billion in revenue, and some of the largest margins of any car company. It is valued today at $7.21 billion in terms of market capitalization. It has a brand that is solid and a waiting list that stretches for years. The management is top notch, as it is still run by Piero Ferrari, the son of Enzo, the founder.
If you want to own RACE, buy it during the first week in April and plan on holding for a few years.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
