Ferrari Shares Dive 12%, Marking Biggest Drop Since 2016 IPO
Ferrari shocked investors with a sharp 12% drop in its share price on a single day. This event, the biggest decline since its 2016 IPO, erased significant value from the luxury automaker’s $78.68 billion market cap.
The plunge followed Ferrari’s announcement of its eighth tranche in a multi-year share buyback program, set to repurchase up to €360 million ($396 million) in shares. Despite strong finances and a positive outlook, the stock market reacted with doubt.
Ferrari Announces Major Share Buyback Program
Ferrari launched the latest phase of its €2 billion share buyback program, first revealed in 2022. This eighth tranche targets €360 million in repurchases, split between €280 million on Euronext Milan and €80 million on the New York Stock Exchange. The program runs from August 22, 2025, to December 18, 2025.
Shareholders approved this move on April 16, 2025, allowing Ferrari to buy back up to 10% of its shares. The authority lasts until October 15, 2026. This signals confidence, but the stock market drop suggests investors see risks ahead.
Why Did Ferrari Shares Fall 12%?
Several factors likely triggered the steep decline in Ferrari’s stock price. Investors might worry about profit margins shrinking amid rising competition. The stock market also faced broader instability, amplifying the sell-off.
The share buyback, though bold, may not ease doubts about future growth. Ferrari boasts a strong 30.3% EBIT margin forecast for Q2 2025. Yet, the 12% drop shows the stock market craves more certainty.
Ferrari’s Financial Strength Holds Steady
Ferrari remains in solid shape despite the stock tumble. Its cash reserves support the hefty €360 million buyback without strain. Analysts still predict healthy profits, with a 30.3% margin expected next year.
The company’s $78.68 billion valuation reflects its luxury brand power. However, the stock market reaction hints at unease about sustaining this edge long-term.
Other Moves
Ferrari made two notable updates beyond the buyback. It plans to cut U.S. price adjustments as EU tariffs drop from 27.5% to 15%, boosting competitiveness. Also, it won a legal fight to keep its Testarossa trademark, unused from 2010 to 2015.
These steps show Ferrari adapting to market shifts. Still, they did not stop the stock market from driving shares down 12%.
Key Figures at a Glance
How the Drop Affects Investors and the Stock Market
The 12% plunge hit Ferrari investors hard, wiping out value fast. Some may now question holding or buying shares. Confidence in the stock could waver short-term.
In the wider stock market, Ferrari’s fall ripples outward. As a big name, its struggles might signal trouble, spooking traders across sectors.
Final Thoughts
Ferrari’s 12% share drop, the worst since its 2016 IPO, rattled investors. Its buyback and financial muscle offer hope, yet the stock market remains wary. Time will tell if this icon rebounds.
Disclaimer:
This content is made for learning only. It is not meant to give financial advice. Always check the facts yourself. Financial decisions need detailed research.