Why Did Vertiv Holdings Plunge 10.53% Amid Tariff Concerns?

On April 3, 2025, Vertiv Holdings experienced a significant drop of 10.53% in pre-market trading, sparking concerns among investors and analysts alike.

Vertiv Holdings has been in the spotlight due to a substantial increase in trading volume over the past week. This surge in interest is attributed to the company's diverse product portfolio, which includes thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions. The company's backlog at the end of 2024 stood at $7.18 billion, reflecting a roughly 30% increase from 2023. Additionally, organic orders grew approximately 30% in the trailing 12 months, with a book-to-bill ratio of 1.2 times for 2024, indicating strong prospects.

Despite these positive indicators, Vertiv Holdings has faced multiple challenges. Concerns about tariffs levied by the U.S. President on leading trade partners, particularly China, in the technology domain, have weighed heavily on the stock. Additionally, sluggishness in near-term order trends has contributed to a 23% plunge in VRT shares over the past week. Year to date, Vertiv shares have dropped 36.4%, underperforming the broader Zacks Computer and Technology sector’s 11.7% decline and the Zacks Computers - IT Services industry’s fall of 13.5%.

Vertiv Holdings is also facing intense competition from peers such as Eaton, Schneider Electric, and ABB Ltd. Eaton, in particular, has been investing aggressively, with over $8 billion in transformative portfolio management. This aggressive investment strategy has created more opportunities for Eaton in areas such as reindustrialization, data center markets, and infrastructure spending.

In terms of valuation, Vertiv Holdings' shares are currently considered overvalued, with a Value Score of C. The company's 12-month price/book ratio stands at 11.29, higher than the sector’s 8.69, Eaton’s 5.8, Schneider Electric’s 3.91, and ABB Ltd’s 6.44. Vertiv shares are also trading below the 50-day and 200-day moving averages, indicating a bearish trend.

Despite these challenges, Vertiv Holdings has made significant strides in expanding its portfolio. In March, the company launched four new systems, including Vertiv Unify software, Vertiv SmartRun, Vertiv CoolLoop RDHx, and Vertiv PowerDirect Rack. These new systems expand capabilities in infrastructure management, prefabricated modular deployment, advanced thermal management, and DC power distribution. Strong capital expenditure spending plans by hyperscalers on data center capacity expansion bode well for Vertiv. The company's rich partner base, which includes Ballard Power Systems, Compass Datacenters, NVIDIA, Intel, and ZincFive, is a key catalyst for growth.