Ferrari Plunges 12.46%—What’s Behind the Worst Drop Since 2016 Listing?

Summary
• Ferrari (RACE) slumps 12.46% in intraday trading, marking its steepest decline since 2016.
• Citi analysts highlight concerns over slowing sales volumes and pricing power amid U.S. tariff adjustments.
• The stock trades near its 52-week low of $391.54, with intraday lows hitting $432.03.

Today’s selloff has sent shockwaves through the luxury automaker’s shares, driven by a combination of pricing strategy shifts and investor skepticism about long-term profitability. With the stock down nearly 13% from its open and trading at a 27% discount to its 52-week high, the market is scrambling to decipher whether this is a temporary correction or a sign of deeper structural challenges.

U.S. Price Cuts and Tariff Shifts Trigger Profitability Doubts
Ferrari’s 12.46% intraday drop stems from a confluence of strategic moves and investor concerns. The company announced it will reduce price compensations for U.S. customers as tariffs on EU imports ease from 27.5% to 15%, a shift that may erode short-term margins. Citi analysts warned that while Ferrari’s Q2 results met expectations, the focus now shifts to whether its EBIT margin can sustain itself amid slowing sales and average selling prices (ASPs). The market’s reaction suggests investors are pricing in a potential margin contraction, particularly as the company’s premium pricing strategy faces headwinds in a key market.

Automotive Sector Mixed Amid Tariff Uncertainty
The broader automotive sector shows mixed signals, with Tesla (TSLA) down 2.79% on concerns over U.S. tariff impacts. While Ferrari’s decline is sharper, peers like GM and Ford are also grappling with tariff-related costs and shifting consumer demand. However, Ferrari’s drop is more directly tied to its pricing strategy adjustments, whereas sector-wide headwinds include broader macroeconomic pressures. The lack of a clear sector leader’s directional influence underscores that Ferrari’s move is more company-specific than sector-driven.

Options and Technical Plays for a Volatile Ferrari
• 200-day average: $459.87 (below current price)
• RSI: 50.55 (neutral)
• MACD: 7.07 (bearish divergence with signal line 7.60)
• Bollinger Bands: Upper $520.87, Lower $479.14 (price near lower band)
• Support/Resistance: 200D support at $431.40–$433.80

Ferrari’s technicals suggest a bearish near-term setup, with price testing critical support levels. A break below $431.40 could trigger a deeper correction toward the 52-week low. The RSI at 50.55 indicates neutrality, but the MACD’s bearish crossover and price proximity to the lower Bollinger band reinforce downside bias.

Top Options Contracts:
• RACE20250815P420 (Put)
- Strike: $420
- Expiration: 2025-08-15
- IV: 32.33% (moderate)
- Leverage: 91.04% (high)
- Delta: -0.2595 (moderate bearish exposure)
- Theta: -0.0205 (slow decay)
- Gamma: 0.01095 (modest sensitivity)
- Turnover: 15,446 (liquid)
- Payoff (5% down scenario): $5.20 per contract (max profit if price drops to $414.80).
- Why it stands out: High leverage and moderate delta position it to capitalize on a sharp drop, while reasonable IV ensures cost efficiency.

• RACE20250815C450 (Call)
- Strike: $450
- Expiration: 2025-08-15
- IV: 27.71% (moderate)
- Leverage: 82.92% (high)
- Delta: 0.3271 (moderate bullish exposure)
- Theta: -0.6066 (rapid decay)
- Gamma: 0.01423 (strong sensitivity)
- Turnover: 103,826 (extremely liquid)
- Payoff (5% down scenario): $0 (out of the money).
- Why it stands out: Liquid and high gamma make it ideal for a short-term bounce trade if the stock rebounds above $450.

Hook: Aggressive bears should target RACE20250815P420 into a breakdown below $431.40. Bulls may chase RACE20250815C450 if the stock reclaims $460.

Backtest Ferrari Stock Performance
The backtest of RACE's performance after an intraday plunge of at least -12% shows a maximum return of 2.86% on the date of the event, with a total of 539 events backtested. This indicates that while there is potential for a rebound, the returns can be modest following such significant downturns.

Act Now: Watch Support Levels and Sector Sentiment
Ferrari’s 12.46% plunge reflects a market recalibrating expectations around its pricing power and margin resilience. While the technicals favor a near-term bearish bias, key support at $431.40 could trigger a rebound or deeper decline. Investors should monitor the 200-day average ($459.87) as a critical psychological level. In the broader sector, Tesla’s 2.8% drop highlights shared macro concerns, but Ferrari’s move remains idiosyncratic. Action: Prioritize the RACE20250815P420 put for a sharp downside play if support breaks. Watch the 52-week low and Citi’s margin commentary for confirmation.