Jan. 30, 2015 6:24 PM ET | 28 comments | About: Molycorp, Inc. (MCP)
Disclosure: The author is short MCP. (More...)
- Molycorp recently received an NYSE notice that the stock could be delisted after trading below $1 for 30 consecutive days.
- With consistent cash burn and operating losses, I do not see any near term catalysts to drive the stock back above $1 for an extended period.
- Investors should avoid MCP as an NYSE delisting appears imminent.
Is Delisting Imminent?In my opinion, a delisting of the stock appears imminent. DA Davidsonrecently downgrated MCP from Buy to Neutral due to lingering production issues at the company's Mountain Pass facility. At bottleneck related to the facility's Leach system has kept the company from operating at full capacity. With cash burn and operating losses not expected to abate any time soon, I do not see any near term catalysts that would drive the stock above $1 for an extended period. Therefore, I believe a delisting is imminent.
ConclusionI believe an NYSE delisting is imminent for MCP. Such an event would cause investors to lose interest in MCP and it would be disastrous for the stock. Investors should avoid MCP.
See the fellowing plots for Molycorp's stock price and rare earth prices. (Data obtained from Google Finance and Metal-pages.)