Ferrari stock price has had a difficult year, falling from a high of $516 in July to the current $375, a move that has erased its market capitalization from the year-to-date high of $136 billion to the current $90 billion.
Ferrari stock price dropped amid concerns about the company
Ferrari, the iconic Italian supercar company, has come under pressure in the past few months as investors have questioned its strategy to launch an electric vehicle in 2026.
This launch comes as companies that launched their EVs to compete with Tesla have paid dearly in the past few months. For example, in a recent statement, Ford, a top American company, was forced to take a $20 billion charge.
Similarly, Porsche, a top German luxury carmaker, has become one of the top laggards in the past few months as it was forced to largely abandon its EV strategy. Other companies like General Motors and Stellantis have had to scale back their EV ambitions.
Ferrari itself has reduced its ambitions in the EV industry, aiming to make 20% of its models fully electric by 2030. Before that, the company aimed to make 40% of its vehicles being electric.
Ferrari also aims to have 40% of its vehicles to be full internal combustion engine (ICE) and the rest to be hybrids.
While this strategy seems balanced, there are concerns that the EV aspect will not work out. It is still unclear whether the EV will have any demand.
Forward guidance and valuation
Ferrari stock price also crashed because of the company issued a mild forward guidance in terms of profitability. It expect to make an adjusted profit margin of 30%. While impressive, it means that its profit will be much lower than expected.
Additionally, the company had one of its worst performances in Formula 1, where it boosted its spending by bringing Lewis Hamilton in.
While the numbers are not public, estimates are that he is earning between $60 million and $70 million a year, much higher than the $12 million it used to pay Carlos Sainz.
There have been concerns about the company’s premium valuation, with its price-to-earnings (PE) ratio peaking at 59, a figure that has dropped to 35. This metric is much higher than that of the automakers, which is understandable because of its premium vehicles.
However, the company’s modest revenue and profitability growth means that it has become highly overvalued.
The most recent results showed that the company’s revenue rose to €1.8 billion in the third quarter, with its adjusted EBIT of over €500 million.
Data compiled by Yahoo Finance shows that analysts expect its revenue to be €1.76 billion, bringing the annual figure to €7.1 billion, up by 6.67%. It will then make €7.59 billion in 2026, a figure that will likely be higher than expected.
Ferrari share price technical analysis
The weekly chart shows that the RACE stock price has pulled back in the past few weeks. It has dropped from a high of $517 to the current $375.
The stock has formed a triple-top pattern and a neckline at $388, its lowest point in April this year. It also moved below the 38.2% Fibonacci Retracement level and the 50-week Exponential Moving Average.
Therefore, the stock will likely continue falling as sellers target the 50% retracement at $340. It will then rebound in the coming months as investors buy the dip. Besides, the company has become relatively undervalued during the ongoing crash.
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