What happened
Shares of Hycroft Mining (HYMC 3.28%), the gold and silver miner that owns and operates the Hycroft Mine in Nevada, rose a huge 35% in the first few minutes of trading on May 5. The tiny miner's stock didn't hold onto all of that advance for long, however, giving up more than half of the gain roughly an hour into the trading day, when it was up around 14%. The big story appears to be the company's earnings release, but there's more going on here than just one news story.
So what
With a market cap of just $300 million or so, Hycroft Mining is not a household name in the precious metals space. At least it wasn't until news of an investment by AMC Entertainment (AMC 3.96%). That would, indeed, be the movie theater operator, in case you were wondering if you'd read that correctly. What exactly does AMC have to do with mining? Nothing, but it brought the name Hycroft to the fore for a whole new group of investors driven more by emotion than fundamentals, noting that AMC has been caught up in the meme stock craze. Hycroft's stock went up well over 50% on the investment. To be fair, AMC Entertainment invested alongside Eric Sprott, a well-known figure in the mining space, so there may be something to the movie house's unusual move. Still, Hycroft's shares have since lost almost all of the gain from that earlier news.
Image source: Getty Images.
Which brings the story back to today, when the company released its earnings statement. That was, really, all it was, since the company didn't actually provide material earnings information in the statement -- like the fact that it lost $0.27 per share in the first quarter, well more than the $0.16 loss in the same quarter of 2021. To find that information, investors had to visit the Securities and Exchange Commission website and dig into the Edgar database.
The earnings statement merely updated investors on production (facts that had been released earlier), the balance sheet, and development efforts at the company's mine. Oh, and the statement reiterated that AMC and Sprott had invested in the company during the first quarter. Investors were clearly excited by the earnings statement, but given the quick advance and then the pullback from the morning's peak, it's probably the new collection of emotionally driven investors that were the driving force today.
Now what
Hycroft Mining is not a good option for most investors. The AMC tie-in here has changed this from a typical gold and silver mining stock into a story stock. The stocks of small precious metals miners are already quite volatile; adding this new angle seems to have only exacerbated this undesirable trait. Perhaps the company's development efforts pay off in the long run, but right now it is hard to justify an investment when the stock is so volatile and, likely, because of investors that wouldn't normally follow a tiny gold miner.
