Ferrari stock price has crashed into a bear market this year after plunging by over 25% from its highest point in July. RACE was trading at $392, lowering its market capitalization to $94 billion, down from $124 billion in March. This article explores the top reasons why the stock has dropped recently.
Ferrari stock has crashed because of Donald Trump’s tariffs
One reason why the Ferrari share price has crashed this year is because of Donald Trump’s tariffs. Like Porsche, Ferrari is highly exposed because it does all its manufacturing in Italy, and the US is one of its biggest markets. It made 993 million in the Americas, which includes the US.
Trump has put in place a 15% tariff, a move that has pushed the company to increase prices by up to 10% on some models to offset the tariff costs. It is likely that the company’s sales will be hurt in the US in the coming quarters.
Slowing growth to continue, as showed by its 2030 strategic plan
The other main reason why the Ferrari stock price has plunged is that analysts expect that its business will deteriorate for a while.
In its most recent results, the company said that its revenue rose by 4% to 1.78 billion euros, while its operating profit jumped by 8% to 552 million euros. The net profit rose by 3% to 425 million euros.
Analysts expect that the company’s growth trajectory will fade this year. The average estimate is that its revenue will be 1.71 billion euros in the current quarter, up by 3.8% from the same period last year. Also, the annual revenue is expected to be 7.1 billion euros.
At the same time, the company published a weaker-than-expected strategic plan for 2030. It plans to have 40% ICE by 2030, 40% hybrid, and 20% electric. Before the strategic statement, the company hoped to have EVs make about 40% of its sales.
Also, the company hopes to have 90,000 active clients, up by 20% from 2022. This target was lower than what analysts were expecting.
Valuation reset is going on
Ferrari stock price has also dipped as it goes through a valuation reset. At its peak, the company had a market capitalization of over $124.98 billion, which was much higher than its peers and it real fundamentals. It had a price-to-earnings ratio of 60, a high premium for a company with single-digit growth rate.
The ongoing crash is part of the valuation reset, which has brought its price-to-earnings ratio to 37. It is common for highly valued companies to drop as its valuation moves to the ideal location.
This crash has also coincided with the falling value of some of its vehicles such as the Purosangue and SF90 Stradale.
Ferrari stock price technical analysis
RACE stock chart | Source: TradingView
The daily timeframe chart shows that the RACE stock price also plunged after finding a strong barrier at around $505. It formed a giant triple-top pattern on that level and has now settled at its neckline.
The stock has now formed a death cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. Therefore, the most likely scenario is where the stock continues falling as sellers target the psychological point at $350.
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