A hill made of potash. But what is it worth? Image source: Getty Images.

What happened

Shares of Intrepid Potash, Inc. (NYSE:IPI) plunged more than 19% in early Wednesday trading and remained off by about 18.1% as of 2 p.m. EST.

So what

No immediate news items have appeared to explain the sell-off, but there may be a hint as to what's going on, if you glance back a couple weeks. Two weeks ago, Intrepid Potash announced that it had engaged investment banker Cantor Fitzgerald to help it explore "strategic alternatives" to boost its business.

As the company explained, such alternatives might include but are not limited to:

  • "continuing its current operating plan" (i.e., doing nothing)
  • "equity offerings or balance sheet restructurings" (which could be either good or bad news)
  • "merger and acquisition opportunities" (probably bad)
  • "partnership or joint venture opportunities, entering into new or complementary businesses" (your guess is as good as theirs)
  • "a sale of Intrepid or some or all of Intrepid`s assets" (Hurray! Cue 14% rise in stock price.)

But now, all of a sudden, Intrepid Potash stock is selling off. What might this mean?

Now what

The most obvious conclusion is that someone has heard something that suggests that Intrepid Potash will not in fact sell itself for a price justifying the 14% gain in share price that followed the company's Dec. 15 announcement. In fact, given that Intrepid Potash stock has now collapsed to almost precisely the same price it held before the rumors of a possible sale began, I'd say that explanation is most likely.

Granted, this can't come as a complete surprise. Management itself warned investors that "there can be no assurance that this evaluation will result in any transaction." But, hey, investors paid their money on Dec. 15. They took their chances. No one ever promised that the best would pay off.

Lesson learned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.