Molycorp Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of rare-earth miner Molycorp (NYS: MCP) fell 14% today after the company released earnings.

So what: Revenue surged 39% from the second quarter to $138.1 million but fell short of the $161.6 million analysts had expected. The disappointment continued on the bottom line, where adjusted earnings per share of $0.67 fell $0.03 short of estimates.

Now what: This is really a case of expectations getting ahead of Molycorp rather than the company not executing well. Rare-earth mineral prices have been falling since Lynas opened a mine in Australia and a processing facility Asia, and I'm worried the same will happen when Molycorp's facility opens. I'm staying away from shares right now and have even identified Molycorp as a possible short candidate, although after this drop it might not be as attractive.

Interested in more info on Molycorp? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.