Ferrari's 5% Plunge: What's Behind the Drama?

Summary
• Ferrari (RACE) slumps 4.99% intraday to $358.39, breaching its 52-week low of $356.93
• HSBC downgrades to 'Hold' amid F1 cost concerns and FX headwinds
• €3.5B buyback program underway, but technicals signal bearish momentum

Ferrari’s sharp intraday decline has ignited market speculation, with the stock trading near its 52-week low amid a confluence of regulatory, strategic, and technical pressures. The European luxury automaker faces a perfect storm: rising F1 research costs, currency volatility, and a bearish technical setup. With HSBC’s downgrade and a $358.17 intraday low, investors are scrambling to decode whether this is a buying opportunity or a warning sign.

Regulatory Overhead and Strategic Gambles Weigh on Ferrari
Ferrari’s 5% drop stems from three key factors: HSBC’s downgrade citing F1 budget cap hikes to $215M for 2026, FX headwinds, and a €3.5B buyback program that may strain liquidity. The firm’s decision to prioritize 2026 F1 development over 2025 models—while strategically bold—has raised concerns about near-term profitability. Additionally, HSBC’s revised EBIT forecast cut by 7% and reduced target price to €345 underscore skepticism about margin sustainability. The stock’s technical breakdown below the 200D MA ($444.89) and Bollinger Bands’ lower bound ($364.70) amplifies bearish sentiment.

Bearish Setup: ETFs and Options for Short-Term Volatility
• 200D MA: $444.89 (far above current price)
• RSI: 48.84 (neutral but trending lower)
• MACD: -3.38 (bearish divergence from -4.75 signal line)
• Bollinger Bands: Price at $358.39 (near lower band at $364.70)
• Support/Resistance: 30D support at $374.77, 200D resistance at $477.71

Ferrari’s technicals paint a bearish near-term picture. The stock is trading below all major moving averages, with RSI and MACD signaling momentum decay. Key levels to watch: $356.93 (52W low) and $373.01 (middle Bollinger Band). The options chain offers limited liquidity, but RACE20260821C370 (call) stands out with a 71,724% leverage ratio and 0.59% implied volatility. However, zero turnover suggests illiquidity. A put strategy would require deeper liquidity, which is absent here. Aggressive bears may consider shorting RACE near $358.39 with a stop above $373.01.

Backtest Ferrari Stock Performance
The backtest of RACE's performance after an intraday plunge of at least -5% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 54.84%, the 10-Day win rate is 52.90%, and the 30-Day win rate is 55.91%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest was 4.53% over 30 days, suggesting that while there is some volatility, RACE can exhibit positive movement in the period following a significant downturn.

Act Now: Ferrari at 52-Week Low, Sector Watch Needed
Ferrari’s 5% drop to $358.39 near its 52-week low signals a critical juncture. Technicals and fundamentals align for continued pressure, with HSBC’s downgrade and F1 cost overruns amplifying risks. Investors should monitor the $356.93 support level and Ford’s (F) -0.43% move as a sector barometer. For now, a bearish bias is warranted, with options and ETFs offering tactical entry points. Watch for a breakdown below $356.93 or a reversal above $373.01 to dictate next steps.