Patriot Coal Shares Got Crushed: 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 Patriot Coal (NYSE: PCX  ) are down 10% today after the company said it was cutting back production.

So what: Two of the company's production units and three contractor-operated mines are being shut down due to low demand for metallurgical coal. The company didn't specify how much production would be cut, only that low export levels are leading to the cuts.

Now what: Patriot Coal expects to bring production back online in the future, but no timetable was given. Slowing growth in China and increased production in Australia have led to the low demand, but management expects demand to come back once the global economy returns to a more normal growth pattern. Since no one knows when that will happen it's tough to say exactly what the effect will be for Patriot Coal.

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

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.

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Read/Post Comments (2) | Recommend This Article (3)

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  • Report this Comment On January 13, 2012, at 1:49 PM, NEMnyWtch wrote:

    Downside risk to upside potential? This is a volitile holding, hence this is a great buy opportunity IMHO.

  • Report this Comment On January 14, 2012, at 4:48 PM, jotanoma wrote:

    I do also agree there is up side potential in PCX do anybody out there think that it will 11.00 in the next two months?

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