Ferrari Stock Crashes 15%

Ferrari (RACE) stock dropped nearly 15% yesterday following management's announcement of reduced 2030 electric vehicle production targets (halved to 20%), lower EBITDA projections of at least €3.6 billion, and delayed EV model launches. This decline has positioned the stock within a historical support range ($387.01 – $427.75) from which it has previously rebounded significantly, averaging 22.8% peak returns. Despite strong underlying fundamentals, including 12.4% LTM revenue growth and robust cash generation, the company's shares remain vulnerable to broader market downturns.

Analysis

Ferrari (RACE) stock dropped nearly 15% following management's disappointing 2030 projections. The company halved its 2030 EV production goal from 40% to 20% and projected a lower 2030 EBITDA of at least €3.6 billion, signaling a tempered growth outlook. Investor apprehension also arose from the delayed delivery of its first EV, the Elettrica, until late 2026, with a second model still in early planning.

Despite the sell-off, RACE is now trading within a historical support range of $387.01 – $427.75, from which it has previously rebounded, averaging 22.8% peak returns. The company maintains robust fundamentals, evidenced by 12.4% LTM revenue growth and a 15.7% average over three years, alongside strong cash generation with an 18.2% free cash flow margin and 28.9% operating margin LTM. Its PE multiple of 46.0 reflects a premium valuation compared to the S&P, supported by superior growth and margins.

However, the stock remains susceptible to broader market downturns and stock-specific risks, as demonstrated by past declines of approximately 38% during the inflation shock, 36% in the 2018 correction, and 28% during the Covid sell-off. These historical precedents highlight that even high-quality stocks like RACE are not immune to substantial declines during market shifts.

Key Decisions for Investors

• Investors should consider the historical technical support range ($387.01 – $427.75) as a potential entry point given past rebound tendencies, while carefully assessing the revised long-term growth projections and delayed EV roadmap.
• Monitor Ferrari's execution on its updated EV strategy and future product pipeline developments, as these will be critical for long-term competitive positioning and growth.
• Recognize that despite strong fundamentals and premium valuation, RACE stock carries significant stock-specific risk and is not immune to substantial declines during broader market corrections.