Leonardo share price: How to Trade Leonardo SpA stock

Understanding Leonardo-Finmeccanica S.p.A. (LDO-I), a key player in the aerospace, defence, and security sectors, is crucial for CFD traders aiming to trade on its stock movements. Keep reading to learn more about this key industry player and how it may form part of your CFD trading portfolio:

TL;DR

• Global Defence Spending: Rising military budgets due to geopolitical tensions increase demand for Leonardo's cutting-edge defence technologies, boosting its stock performance.
• Leverage in CFD Trading: CFDs allow traders to magnify gains by using leverage; however, this also heightens the risk of significant losses, requiring careful risk management.
• Operational Strength: Leonardo's business divisions, particularly helicopters and defence electronics, consistently secure high-value contracts, driving profitability.
• Supply Chain Dependencies: Reliance on key partners like Boeing (BA) introduces risks, as delays or issues with major customers can impact financial results and stock prices.

What Is Leonardo-Finmeccanica?

Leonardo S.p.A., formerly Leonardo-Finmeccanica and originally Finmeccanica, is a leading Italian multinational corporation specialising in aerospace, defence, and security. Headquartered in Rome, it operates across the globe and is one of the largest defence contractors worldwide. The Italian government holds a significant 30.2% ownership stake in the company, making it the largest shareholder (as of November 2024).

The company has undergone substantial transformation over time. Initially established in 1948 as Finmeccanica, a state-owned enterprise, it transitioned into a partially privatised entity listed on the Milan Stock Exchange in 1993. Over the decades, Finmeccanica consolidated Italy's aerospace and defence sectors, integrating major players such as Agusta, OTO Melara, and Alenia Aermacchi. Key milestones include the formation of AgustaWestland through a merger with GKN's helicopter division and its involvement in high-profile joint ventures like MBDA for missiles and ATR for turboprop aircraft.

In January 2016, the company restructured into a single industrial entity, incorporating its subsidiaries into core divisions: Helicopters, Aircraft, Aerostructures, Electronics, and Cybersecurity. This strategic shift aimed to enhance efficiency and streamline operations. Reflecting its modern identity, the company rebranded as Leonardo S.p.A. in 2017, honouring the legacy of Leonardo da Vinci.

Leonardo remains active in global markets, delivering cutting-edge technology solutions for defence, aviation, cybersecurity, and space exploration. Its collaborations include participation in the Eurofighter Typhoon and the Global Combat Air Programme. With a strong international presence, Leonardo continues to drive innovation in the aerospace and defence sectors.

LDO-I Share Price History

Leonardo S.p.A.'s stock performance reflects its growth trajectory and significant volatility, influenced by internal restructuring, sector trends, and macroeconomic events. Initially trading under the name Finmeccanica, its shares saw moderate fluctuations during the mid-2000s, driven by steady defence spending and the company's expansion through major acquisitions. However, the 2008 financial crisis and subsequent recession negatively impacted global markets, including Leonardo's stock, which declined as investor confidence waned.

The 2010s marked a period of transformation, with the company rebranding as Leonardo in 2017. Stock performance during this decade was mixed due to corruption scandals, leadership changes, and challenges in key markets. Despite setbacks, strategic realignments and an increased focus on core aerospace and defence divisions helped stabilise growth.

The 2020s have seen a resurgence, particularly post-pandemic. Heightened geopolitical tensions and increased defence budgets, especially across the European Union following the Russian invasion of Ukraine, drove demand for Leonardo's advanced defence solutions. The stock experienced substantial growth in 2023, benefiting from robust order books and expanding international partnerships, with shares continuing to climb nearly 70% from January to November 2024.

How Are Leonardo Shares Traded?

Investors looking to engage with Leonardo share trading can do so through traditional exchanges by directly purchasing shares or by utilising CFDs as an alternative strategy. CFDs allow traders to speculate on the price movements of Leonardo shares without owning the share itself, offering flexibility for short-term trading opportunities.

CFD trading is characterised by leverage, which allows traders to open positions larger than their initial capital outlay. This amplifies the potential for profits, as even small price movements can result in significant returns. However, it equally increases the risk of substantial losses, particularly if the market moves unfavourably. Therefore, leveraging CFDs requires careful risk management strategies, such as stop-loss orders.

Factors Affecting Leonardo-Finmeccanica's Share Price

For CFD traders, understanding the factors influencing Leonardo's share price is crucial, even without owning the underlying shares, as price volatility directly impacts trading outcomes.

• Defence Spending and Geopolitical Tensions: Increases in global defence budgets, often driven by geopolitical conflicts and military modernisation, significantly boost demand for Leonardo's products, from helicopters to defence electronics.
• Operational Performance and Divisional Growth: Strong performance in key units like defence electronics and helicopters, which consistently secure high-value orders, support revenue and profitability, positively affecting share price trends.
• Supply Chain and Partner Dependencies: Delays from partners like Boeing, a major customer for Leonardo's aerostructures, can hinder profitability and growth projections, as revealed in earnings releases, creating potential downward pressure on shares.

These factors highlight the importance of closely monitoring macroeconomic and sector-specific developments when trading CFDs on Leonardo's share price.

Analysing Leonardo Shares for CFD Trading

When trading CFDs on Leonardo shares, traders tend to employ three primary analysis methods—fundamental analysis, technical analysis, and sentiment analysis. Here are some tips for applying these strategies to your own trading:

Fundamental Analysis

• Earnings Reports and Financial Health: Regularly review Leonardo's earnings reports, focusing on metrics like earnings before interest, taxes, depreciation, earnings per share (EPS), and revenue growth to assess its financial position.
• Operational Performance: Monitor key divisions such as defence electronics and aerostructures, which drive profitability, alongside order backlogs to gauge long-term potential.
• Industry Dynamics: Leonardo's performance is influenced by factors like global defence spending, geopolitical tensions, and supply chain stability, particularly with key partners such as Boeing.

Technical Analysis

• Trend Patterns: Study historical price trends to identify recurring movements or potential shifts.
• Volume: Observe trading volumes to detect signals of momentum or possible reversals.
• Indicators and Tools: Use technical tools like moving averages, the Relative Strength Index (RSI), and MACD to refine entry and exit strategies.
• Support and Resistance: Define these levels to set stop-losses, effectively managing risk exposure.

Sentiment Analysis

• Running Developments: Follow news regarding major projects like the Global Combat Air Programme and defence contracts to anticipate market reactions.
• Market Trends: Broader investor sentiment regarding aerospace and defence stocks can influence Leonardo's valuation.
• Investor Behaviour: Analysing bullish or bearish trends among institutional and retail investors can signal potential price movements.

You may consider pairing these strategies with robust risk management, as even the most experienced CFD traders run the risk of significant financial losses.

How to Start Trading Leonardo CFDs with Plus500

Learn the Basics

Start by familiarising yourself with the principles of CFD trading. Use resources like the Beginners' Guide to understand how CFDs work, the mechanics of leverage, and the risks involved before committing any funds.

Create an Account

Complete the sign-up process by opening your trading account and verifying your identity. Use the unlimited demo feature to practise trading in a risk-free environment, building your confidence and refining your strategies.

Start Trading Leonardo CFDs

After funding your account, locate Leonardo CFDs on the Plus500 trading platform. Decide whether to take a long position (if you expect the price to rise) or a short position (if you predict a decline). Consider risk management strategies, such as stop-loss orders, to mitigate potential losses, as CFD trading carries a significant risk of capital loss.

Conclusion

CFD trading on Leonardo shares provides a flexible way to capture price fluctuations influenced by global defence trends and operational developments. By staying informed on these drivers and employing robust risk management, traders may be better placed to navigate the inherent volatility of CFD trading, although the accompanying risks can never be eliminated.

Start trading Leonardo's share CFDs with Plus500!