Please ensure Javascript is enabled for purposes of website accessibility

Why Sociedad Quimica y Minera de Chile Stock Dropped 9% Before Earnings

By Rich Smith - May 17, 2021 at 11:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The lithium miner's next quarterly report is due out soon -- and investors are nervous.

What happened

Shares of Chilean lithium miner Sociedad Quimica y Minera de Chile (SQM 3.55%) dropped in morning trading Monday, down 9% as of 11:10 a.m. EDT on no apparent news. Then again, it's probably not today's headlines that investors are worried about in regard to SQM -- it's "tomorrow's."

So what

I'm speaking figuratively here of Sociedad Quimica's upcoming Q1 2021 earnings report, which could come out "tomorrow," or the next day, or ... honestly, we don't know quite when it will arrive, because SQM hasn't announced a release date just yet.

What we do know is that the lithium miner announced its last quarterly earnings (for Q4 2020) on March 3, and filed that report with the SEC on March 4, a few days later on the calendar than it has done so for its Q4 reports in years past. Based on its recent history of delivering its first-quarter reports between May 18 and May 23, this year's first numbers could arrive any time in the next week or two.    

Given all of that, investors selling SQM stock lower on Monday may be anticipating bad news.

Panic selling as man in tie follows a bear down a red arrow

Image source: Getty Images.

Now what

According to analysts who follow the stock, SQM is expected to earn $0.25 per share for the fiscal first quarter -- on par with what it earned last year. That would be a disappointment, though, inasmuch as analysts also think SQM grew its sales 8% year over year to $512.4 million.  

If earnings don't grow at least as fast as sales, that would indicate weakening gross margins in the lithium business ... and that would be bad news not just for Sociedad Quimica y Minera de Chile, but for anyone else involved in the lithium industry, as well.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sociedad Quimica y Minera de Chile S.A. Stock Quote
Sociedad Quimica y Minera de Chile S.A.
SQM
$96.08 (3.55%) $3.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.