Ferrari stock price crash: here's why RACE has plummeted

Ferrari's (RACE) stock has entered a bear market, plummeting over 25% from its July peak, driven by multiple factors. The imposition of 15% tariffs by Donald Trump is significantly impacting its crucial US market, leading to price increases and anticipated sales declines. Investors were also disappointed by the company's 2030 strategic plan, which outlined a lower-than-expected 20% electric vehicle sales target and modest client growth projections. This decline is further viewed as a valuation reset, bringing its price-to-earnings ratio from an elevated 60 to 37.

Analysis

Ferrari (RACE) stock has entered a bear market, plummeting over 25% from its July peak, resulting in a market capitalization reduction from $124 billion to $94 billion. This significant decline is primarily attributed to the impact of Donald Trump's 15% tariffs on Italian-made vehicles, which directly affects Ferrari's crucial US market, and investor disappointment with the company's 2030 strategic plan.

The tariffs have forced Ferrari to increase prices by up to 10% on some models, likely hurting future US sales, a region that generated €993 million for the company. Furthermore, the 2030 strategic plan outlined a lower-than-expected 20% electric vehicle sales target, contrasting with prior hopes for 40% EVs, and a modest client growth projection of 90,000 active clients by 2030, both falling short of analyst expectations. Despite recent revenue growth of 4% and operating profit growth of 8%, analysts anticipate a fading growth trajectory.

The stock's downturn is also characterized as a valuation reset, with its price-to-earnings ratio contracting from an elevated 60 to 37, reflecting a more realistic assessment compared to its single-digit growth rate and peers. Technically, RACE has formed a triple-top pattern at $505 and a bearish death cross, indicating potential further downside towards the $350 psychological level.

Key Decisions for Investors

• Investors should closely monitor the ongoing impact of US tariffs on Ferrari's sales volumes and pricing power in key markets, as well as any potential policy changes.
• Assess the long-term implications of the 2030 strategic plan's electric vehicle transition and client growth targets against evolving industry trends and competitor strategies.
• Consider the current valuation reset and bearish technical indicators, such as the death cross, as potential signals for continued price volatility or further downside risk.