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Why Ferrari may be the exception in the IPO market

Opening up more than 15 percent from the initial public offering (IPO) price before closing almost 6 percent higher, shares of luxury car maker Ferrari were in the spotlight on their first day of trading.

What makes this sexy car company all the more interesting is that it is an anomaly in an otherwise tough IPO market — one that could continue to test upcoming IPOs, one expert said.

"I think we have a lot of work to do to repair the IPO market," Renaissance Capital principal Kathleen Smith told CNBC's "Squawk on the Street" Wednesday.

Over the past month, share issuers have had to discount their prices well below the mid-point of their IPO price range, Smith said. The number of withdrawn or postponed IPOs this year is approaching 70, marking the highest level since 2012, according to research firm Dealogic.

Take grocery chain Albertsons, which last week pushed its IPO back to November amid market volatility. First Data landed in the red its first day of trading last week, just like Pure Storage earlier this month.

The IPO market was dominated by biotech offerings in the third quarter, according to Renaissance Capital's latest IPO Quarterly Review, while technology companies held back. With the biotech bubble deflating, Smith said, the consumer and technology sectors could be poised for a comeback.

Despite a 43 percent year-over-year dip in IPO deals during the third quarter, according to Renaissance Capital, Ferrari isn't the only company betting on the public market. On the heels of Ferrari's success, financial services start-up Square and online dating giant Match are setting to test whether the IPO market is ready to swing up, Smith said.

A major challenge will be reconciling high private-market valuations with what the public market's willing to pay.

"We're going to have a good test of it with the Square IPO that's lining up to get done with the mobile payments company," Smith said. "That's going to be the issue of a unicorn with a $6 billion valuation and how it reconciles itself in the publicly-traded market."

Ride-hailing giant, Uber, on the other hand, is "too early in the cycle" to consider an IPO despite a $50 billion private valuation, according to comments made Tuesday by CEO Travis Kalanick. That could show that the issue of translating hefty private valuations to the public market is not limited to Square, Smith said.

"There is a disconnect, I think, between that valuation and what the public markets would pay," Smith said. "So we think the reason they're waiting has everything to do with the fact they don't want to mark down that last, very high valuation. The public markets won't understand how to get to $50 billion for Uber."

Others have chimed in to say some caution might be healthy for the IPO market. It could be a good sign that the public market is being more selective, said Elevation Partners co-founder Roger McNamee Monday.

"You don't want to see people creating things that are bologna and then selling them to public investors," McNamee said.