Why Molycorp's Shares Plunged


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 Molycorp (NYS: MCP) fell another 11% today after the company announced pricing for its debt and stock offering.

So what: Yesterday I reported on the dilutive offering and what a bad sign it is for the company, and today we found out just how little investors wanted to buy new shares of the stock. Molycorp said it was pricing the common stock portion of the offering at $10 per share, which is why shares have fallen to just below that price today.

Now what: There's really nothing good I can say about Molycorp at this point. The company's cash flow is disappointing because rare-earth-mineral prices are falling and the company has now diluted shareholders just to build out capacity. I continue to think the stock is off limits until we see the company reach full production and prices stabilize on the global market.

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The article Why Molycorp's Shares Plunged originally appeared on Fool.com.

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.

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