The second claim is especially problematic. They are anticipating that the wealth of the ultrarich will grow at an 8 percent compounded annual growth rate (CAGR) from 2014 to 2017.
Not surprisingly, they are expecting particularly strong growth among the rich in Asia-Pacific, where they are expecting wealth to grow by 10.3 percent annually from 2014 to 2017.
Anyone who is looking at China, or anyone listening to Burberry this week and noted a sharp slowdown in luxury sales in China, should take such assumptions with a grain of salt.
They do make an interesting claim: that their net revenues, which achieved a 7 percent CAGR from 2005-2014 was "almost untouched by the financial crisis." Here is another assumption: that the ultrarich will not be affected by any future global downturn.
Do you believe that is going to happen? OK, fine.
There's another problem I have. They claim they are going to be growing. But they also make claims that they are super-exclusive. And they are — 7,000 cars a year is pretty exclusive. But do growth and exclusivity go hand-in-hand? I'm not so sure.
Neither is Aswath Damodaran from the NYU Stern School of Business. He was on our air Friday morning and immediately said that he thought Ferrari was worth $7.2 billion.
That is well below the roughly $10 billion the IPO would imply. His argument is that if they want to increase their valuation, they are going to have to dramatically increase sales.
But, he argues, they will not be able to keep their margins and the price premium if they dramatically increase sales. They are going to have to cut their prices.
His point is, you can go for: 1) low growth, high prices and high exclusivity, or 2) high growth, less exclusivity,and lower prices.
But you can't do both. And Ferrari implies that it can.