Shares of the lithium miner
Albemarle
had another very bad day, but unlike many times when stocks make large moves, there was no clear primary factor behind the loss.
The stock was the second-worst performer in the
S&P 500
on Tuesday. Only shares of
Expeditors International of Washington,
which slid 6.9% in response to the logistics company’s quarterly earnings, fell more.
Albemarle stock dropped 6.3%, closing at $114.82 a share, while the S&P 500 and
Nasdaq Composite
were off 0.6% and 0.9%, respectively.
The loss in the overall market deserves some of the blame, but it doesn’t explain the entire drop. News about electric vehicles, which use lithium-ion batteries, were another part of the story.
Ford Motor
said Tuesday that it was cutting prices for its all-electric 2023 Mustang Mach-Es. While prices for the 2024 cars are unaffected, the 2023 cuts show that there is still some excess inventory to clear out. Shares of
Tesla,
the biggest EV company, fell 3.1%.
Ford didn’t immediately respond to a request for comment about how much 2023 inventory is left, but excess supplies of cars mean lower prices for longer. And lower prices have been pressuring EV profit margins for more than a year.
Tesla generated an operating profit margin of about 8% in the fourth quarter, down from about 16% a year earlier. Wall Street expects an operating profit margin of about 9% in the first quarter of 2024. Stable prices are a must for it to hit that figure.
Ford, of course, does more than sell EVs, so its stock is less affected by its EV price cuts than Tesla shares. Ford stock fell 0.4% on Tuesday.
Another reason for Albemarle stock’s decline looks to be commodity pricing. Commodity producers’ stocks often trade in line with commodity prices.
Benchmark lithium prices dropped 2% on Tuesday to about $13,300 per metric ton. Through midday trading, prices were down some 77% over the past 12 months. Albemarle stock was off about 53% over the same span.
Finally, there is post-earnings volatility. Albemarle stock was about $114 a share before the company reported its fourth-quarter numbers last week, including several scenarios for lithium prices. Shares closed out the week at more than $122, only to lose that ground on Tuesday.
Write to Al Root at [email protected]
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