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The Cleveland-Cliffs Roller Coaster: Is It Time to Buckle Up or Jump Ship?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Headlines highlighting Cleveland-Cliffs Inc.’s operational challenges and unfavorable economic conditions stir negative market sentiment, resulting in a significant stock price decline. On Monday, Cleveland-Cliffs Inc.’s stocks have been trading down by -6.71 percent.

Market Impacts: Key Developments

  • A sudden drop in international steel prices has directly impacted Cleveland-Cliffs’ stock value, hitting the company’s core business.
  • Recent advancements in alternative steel manufacturing technologies are challenging traditional production methods, influencing investor sentiment and drawing a cautious outlook.
  • Proposed tariffs on imported steel are facing regulatory hurdles, adding further uncertainty to Cleveland-Cliffs’ competitive pricing strategies and affecting market speculations.

Candlestick Chart

Live Update at 17:03:40 EST: On Monday, November 04, 2024 Cleveland-Cliffs Inc. stock [NYSE: CLF] is trending down by -6.71%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of Cleveland-Cliffs Inc.’s Recent Earnings Report

Analyzing CLF’s latest earnings report is akin to peeling back the layers of a complex financial onion. At the surface, the numbers seem overcooked with expectations thrown awry. Yet, with $21.99B in revenue, there’s both promise and peril in the details.

Revenue and Profitability

Despite churning out significant revenue, the ship seems helmed towards rocky seas of narrow profit margins. An ebitda margin of only 6% sheds light on some choppy operational efficiency. It’s a dense yet revealing picture — like trying to decipher a weathered map guiding steel’s unpredictable currents.

Cash Flow and Investments

Cash tends to tell tales no text can conceal. CLF’s free cash flow of $362M illustrates a narrative of robust investment potential, yet it bounces off against the sharp rocks of net capital stock repurchase penalties amounting to $125M. Navigating these waters means balancing on the precipice of fiscal prudence and aggressive market footholds.

More Breaking News

Debt and Liabilities

CLF, with its total debt-to-equity ratio sitting moderately at 0.49, sails neither tight nor loose. It’s a touchstone of cautious leverage amidst turbulent industry seas where even a slight tip might lead to a precarious plunge.

Breaking Down Financial Metrics

Despite the revenue clout, CLF seems locked in a paradoxical seesaw of growth and sustainability. Metrics such as a gross margin of 28.6% offer blindsight optimism, while the undervalued price-to-sales ratio of 0.3 compels a deeper evaluation. It’s a balance indeed — the kind of equilibrist act that makes analysts mull over textbooks of market wisdom.

Key Ratios and Market Implications

Dissecting Cleveland-Cliffs’s valuation measures aligns much like a game of hide and seek — there are treasures and traps. The current ratio of 1.9 hints at contracts stashed safely within reach against short-term obligations, while the coverage of 4.5 times over interest expenses paints a canvas of moderate assurance.

Conclusion: Navigating Current Waters

Fortune, they say, favors the bold, but with Cleveland-Cliffs, perhaps fortune also leans toward the shrewd. The coming days might reveal new tributaries, or the same old whirlpools wearing new guises. With each financial report, the narrative of CLF spins, sending ripples that shape investor expectations and company provident planning. As an investment endeavor, Cleveland-Cliffs’ present is volatile, beckoning those who would brave its potential upswings or risk facing the wrath of its undercurrents.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”