Failing to meet top- and bottom-line estimates, Turquoise Hill (TRQ) reported third-quarter 2021 earnings yesterday after the market closed, and investors, unhappy with the results, are sending the stock spiraling down today. While analysts expected the copper producer to report revenue of $673.2 million and earnings per share (EPS) of $0.92, the company booked sales of $622.8 million and EPS of $0.17.
As of 12:35 p.m. EDT, shares of Turquoise Hill have plunged 21%.
Investors are unimpressed with the fact that the company reported year-over-year improvements in copper production and gold production of 16% and 256%, respectively. Instead, investors are reeling from the fact that the company's bottom line was considerably less lustrous than that which analysts had been expecting. Even more than that, investors are still likely concerned about the funding requirements for Oyu Tolgoi, the company's sole operating asset. In the news release addressing the Q3 2021 earnings, the company reiterated the belief that funding requirements for Oyu Tolgoi remained at $3.6 billion as it had mentioned several weeks ago.
Investors are surely also concerned that the company continues to suffer from the force majeure that it had declared on March 30, resulting in the company facing "supply chain disruptions" from COVID-19-related restrictions on the Mongolia/China border -- a circumstance which has led to the company holding "above target inventory levels."
Copper-minded investors may have a chance to scoop up shares of Turquoise Hill on sale today after the sell-off; however, they must remember that Turquoise Hill isn't the only copper game in town. With the company so reliant on the success of its one asset, Oyu Tolgoi, risks surrounding the company are high -- a fact that investors are seeing play out today after the company's disappointing earnings report.