Molycorp Plunged: What You Need to Know

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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 oxide producer Molycorp (NYSE: MCP  ) plunged as low as 14% in intraday trading today on news that China was looking to end its "embargo" on rare earth metals.

So what: Molycorp and Rare Element Resources (AMEX: REE  ) have sky-rocketed recently on China's increasing reluctance to export rare earth elements to the rest of the world. It's no surprise, then, that today's New York Times report -- which suggests that China is reversing course -- had those very same stocks plummeting.

Now what: Just yesterday, fellow Fool Tim Beyers suggested that rare earth stocks were particularly bubbly, and I have to agree. Even when you factor today's double-digit plunge, Molycorp is still up more than 160% since its late July debut. But without China-scare headlines feeding the rare earth buying frenzy, it's tough to see how Molycorp stays at these lofty levels.

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

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. 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 Fool's disclosure policy always gets a perfect score.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 28, 2010, at 9:40 PM, Maksani wrote:

    China's rare earth metals industry saw a threat in the capitalization of foreign competitors and wasted no time in nippin' it in the bid. i was ready to throw down some cash on MCP, now not so sure.


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7/1/2016 2:31 PM
MCPIQ $0.03 Down +0.00 -2.42%
Molycorp, Inc. CAPS Rating: ***
REE $0.00 Down +0.00 +0.00%
Rare Element Resou… CAPS Rating: *