Ferrari raised its outlook for the year. Why did the stock collapse at the fastest pace in 9 years?

Italian luxury sports car maker Ferrari raised its 2025 forecast for both revenue and profits at its investor day on October 9. But its shares began to fall so fast after the publication that trading in Milan had to be suspended. According to Bloomberg, the collapse in the luxury brand's stock price was the strongest since 2016. Investors found the company's expectations too modest.

Ferrari said it now forecasts revenue of at least €7.1 billion in 2025 versus the previous "more than €7 billion". According to the company's updated forecast, adjusted earnings for the year should be at least €8.8 per share instead of the previously expected "at least €8.6." The automaker also said it aims to increase annual revenue to "approximately €9 billion" and earnings per share to €11.5 or higher by 2030.

Despite the improvement in the annual forecast, Ferrari shares collapsed by 14% in Milan. The collapse was so strong that trading had to be suspended, Reuters reports. According to Bloomberg, the market has not seen such a fall in quotes of the Italian symbol of speed and luxury since 2016.

The company's premarket receipts on the New York Stock Exchange were down about 12%.

Ferrari's new forecasts turned out to be quite cautious, which did not please investors, writes Bloomberg. Thus, the adjusted profit by 2030, as the company expects, should increase to € 3.6 billion from € 2.72 billion this year. This means a weaker rate of profit growth than what the company's management called three years ago, the agency noted.

Ferrari's new EBIT (earnings before interest and taxes) target for 2030 assumes a compound annual growth rate (CAGR) of 6%, RBC Capital Markets analyst Tom Narayan calculated. Three years ago, the company projected a CAGR of 10%, he recalled.

"A CAGR of 6% is perhaps a conservative [forecast], but investors are likely to perceive this as a slowdown in EBIT growth compared to what it has been in the past," Narayan noted.

Market participants may also have been disappointed by the cautious tone of Ferrari's forecast - even though the company has previously set modest targets and then exceeded them, Bloomberg added.

Ferrari also said Thursday it has halved its 2030 electric car production target. The sports car maker now predicts electric cars will make up about 20% of its lineup in five years, instead of the 40% set in the business plan three years ago. The target share of cars with internal combustion engines by 2030 has been raised to 40%, while hybrids remain at 40%. The market hardly reacted to this change of plans.

The adjustment of the range structure targets follows the unveiling of the chassis and powertrain for the Ferrari Elettrica, the first all-electric car in the brand's history. The company plans to start deliveries of the model at the end of 2026.

Like other supercar manufacturers, Ferrari is cautious about electrification, Reuters notes. In June, the agency reported that the company postponed the release of its second electric car model until 2028 due to lack of demand. Ferrari's rival Lamborghini, part of Volkswagen, has postponed the release of its first electric model to 2029, explaining that the market is not yet ready. Luxury car brand Porsche decided to promote electric cars, but found itself squeezed between the crowded Chinese market and Western buyers who still prefer sports cars with roaring traditional engines, recalls Reuters.

Ferrari receipts in New York have risen 12.8% since the beginning of 2025. This result is only slightly behind the growth of the main American index S&P 500 (+14.83%).

The securities have 25 ratings from analysts: most advise buying them (14 Buy and five Overweight), MarketWatch shows. Another five recommend holding the receipts (Hold), only one thinks they should be sold (Underweight). The consensus target price is $541.6, up 13% from the current price target.

This article was AI-translated and verified by a human editor