On Holding Stock Plummets 3.75% Amid Rising Costs and Tariff Pressures Trailing 417th in 330M Trading Volume

Market Snapshot

On March 12, 2026, shares of On Holding (ONON) fell 3.75%, with a trading volume of $0.33 billion, ranking 417th in market activity. Despite reporting record net sales of CHF 3 billion for 2025—a 30% year-over-year increase—the stock experienced a 12.21% premarket decline. This drop occurred amid concerns over rising selling, general, and administrative (SG&A) expenses and tariff headwinds, which offset the company’s strong top-line growth and profitability metrics, including a 62.8% gross profit margin and CHF 1.009 billion in cash reserves.

Key Drivers

The stock’s decline reflects a divergence between On Holding’s operational performance and investor sentiment, driven by three critical factors. First, while the company achieved a 30% YoY revenue increase and a record gross margin in 2025, its SG&A expenses rose at a faster pace than revenue growth in recent quarters. For example, SG&A expenses totaled CHF 397.5 million in September 2025, up 7.99% year-over-year, compared to revenue growth of 6.03%. This trend, combined with a 52.7% drop in EBITDA for the December 2025 quarter, signaled potential margin compression, prompting investors to reassess the company’s cost discipline.

Second, the company faces ongoing tariff risks, particularly in its direct-to-consumer (DTC) expansion strategy. The CEO acknowledged these challenges in a recent statement, noting that strategic measures are being taken to mitigate currency and tariff pressures. However, the market’s reaction—a premarket drop despite strong 2025 results—suggests skepticism about the effectiveness of these measures. For instance, while the company guided for Q1 2026 revenue of $1.09 billion and Q2 revenue of $1.15 billion, the December 2025 quarter saw a 6.37% decline in revenue to CHF 743.8 million, highlighting volatility in demand or pricing power.

Third, the company’s earnings performance has shown mixed signals. While adjusted EBITDA margin reached 18.8% in 2025, operating income for the December 2025 quarter fell 34.2% to CHF 82.1 million. Additionally, net income for the same period declined 41.9% to CHF 69.1 million, underscoring challenges in translating revenue growth into bottom-line profitability. These figures contrast with earlier quarters, such as September 2025, when operating income grew 34.6% to CHF 124.8 million, demonstrating inconsistent execution.

The stock’s performance also reflects broader market dynamics. On Holding’s cash position strengthened to CHF 1.009 billion in 2025, and its Q1–Q2 2026 guidance (EPS of $0.35 and $0.41, respectively) signaled continued growth expectations. However, the December 2025 earnings report—marked by a 9.4% revenue shortfall relative to forecasts—highlighted risks in meeting these targets. The market’s 12.21% premarket drop suggests that investors are prioritizing near-term operational risks over long-term guidance, particularly given the company’s exposure to global supply chain and currency fluctuations.

Finally, the CEO’s emphasis on innovation and DTC expansion as growth drivers appears to have limited immediate impact. While the company’s gross profit margin reached 62.8% in 2025, the DTC strategy has yet to fully offset rising SG&A costs. For example, SG&A expenses in the December 2025 quarter totaled CHF 393.3 million, a 1.06% decline year-over-year but a 6.3% increase compared to the previous quarter. This indicates that while the company is managing to control absolute expense growth, the relative burden on margins remains a concern for investors.

In summary, On Holding’s stock price movement on March 12, 2026, reflects a tug-of-war between strong revenue and margin performance and persistent cost and external risks. While the company’s long-term growth strategy remains intact, near-term challenges in SG&A management, tariff impacts, and inconsistent quarterly results have led to a correction in investor sentiment.