Why Molycorp's Shares Got Crushed

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: Today started off on a positive note for Molycorp (NYSE: MCP  ) after it released earnings. The stock was once up 6.6%, after reporting a slightly better loss than expected, but shares quickly fell 14.5% after investors found out about an SEC investigation.

So what: Hidden in the company's 10-Q filing is notice of a formal investigation by the SEC into the company's public disclosures. What's curious is that the investigation began in August, but this is the first disclosure, and there was no mention of it in the company's earnings press release or its conference call.

Now what: At the very least, this sounds a little fishy. It's always best to be upfront about these kinds of challenges, and we know that investors hate it when the SEC comes a-knockin'. We have very little detail about the investigation except that Molycorp is cooperating.

It looks to me like management wanted to sweep this under the rug, if possible, and it certainly needs to answer investor concerns quickly. I didn't like Molycorp before this, but I definitely would be a seller after the investigation disclosure.

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

 

Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2105535, ~/Articles/ArticleHandler.aspx, 10/2/2014 6:28:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement