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.
So what: Yesterday's drop was a result of another massive loss in the first quarter and today analysts at JPMorgan piled on by downgrading the stock to underweight. They said another capital raise is likely this year, which is logical considering the rate Molycorp is burning through cash.
Now what: Cash balance on March 31 was $236.1 million but operations burned through $45.8 million in the first quarter and there was another $29.8 million spent on capital expenditures. With rare earth mineral prices falling as Molycorp increases supply, there's no reason to think that operations will suddenly turn cash flow positive and the only option to stay afloat is to sell more shares. With so many factors working against Molycorp, I'd stay far away from this stock.
Will this stock be your next multibagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.