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Cleveland-Cliffs Stock Dips: Buying Opportunity or Trouble Ahead?

Jack KelloggAvatar
Written by Jack Kellogg Reviewed by Tim Sykes Fact-checked by Ellis Hobbs
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Cleveland-Cliffs Inc.’s stock is affected by the potential volatility from macroeconomic pressures impacting the steel industry; On Thursday, Cleveland-Cliffs Inc.’s stocks have been trading down by -7.31 percent.

Recent Market Developments

  • Cleveland-Cliffs stock faced a decline as market tremors sent shockwaves. Experts point to cooling steel demand as a major driver.

Candlestick Chart

Live Update At 11:37:36 EST: On Thursday, December 12, 2024 Cleveland-Cliffs Inc. stock [NYSE: CLF] is trending down by -7.31%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Speculators eye Cleveland-Cliffs’ strategic maneuvers to offset economic headwinds, particularly concerning potential mergers and acquisitions.

  • Labor unrest and union negotiations are causing ripples, leaving investors pondering how contract changes might impact operational costs.

  • Global commodity prices wobble, placing Cleveland-Cliffs in a precarious position as they navigate volatile iron ore markets.

Cleveland-Cliffs Inc.: Analyzing Financial Pulse

“When it comes to trading, it’s crucial to have a solid strategy in place. As millionaire penny stock trader and teacher Tim Sykes, says, “Cut losses quickly, let profits ride, and don’t overtrade.” This quote emphasizes the importance of risk management and discipline, which are essential for success in the fast-paced world of trading. Adopting such a mindset can help traders navigate the markets more effectively and achieve their financial goals.”

Cleveland-Cliffs Inc., a prominent player in the steel industry, finds itself under the microscope following its recent earnings report. With revenue clocking in at $21.99B, the company exhibits a robust sales foundation, yet its profitability ratios reveal a more nuanced picture. Despite achieving a gross margin of around 50.6%, the company’s bottom line showed a dismal negative profit margin of -2.31%. These figures aren’t cosmic mysteries, they’re hard truths in a fiercely competitive market.

To further understand the predicament, consider the company’s enterprise value of $9.54B. At first glance, it showcases potential. However, the intricate dance between debt and equity, where Cleveland-Cliffs holds a long-term debt of roughly $3.77B, raises eyebrows among investors. The total debt-to-equity ratio standing at 0.55 paints a cautious financial portrait — manageable, yet precarious.

Financial arm wrestling aside, operational dynamics at Cleveland-Cliffs are compelling. With decent asset turnover and receivables turnover, the company illustrates some inbuilt resilience. Nonetheless, the return on equity of 16.32%, coupled with a lower return on assets at 5.37%, suggests that while investments may be yielding returns, asset utilization isn’t optimal.

Impact of Recent News

Steel Demand Softens

Global shifts in steel demand are making waves, and Cleveland-Cliffs is certainly feeling the impact. An economic slowdown has dampened infrastructure spendings, leading to a subdued steel market. As manufacturers curb their output, lower steel orders have trickled upstream, pressing companies like Cleveland-Cliffs to reassess production strategies.

Strategic Mergers and Acquisitions

In the face of an uncertain market, Cleveland-Cliffs is rumored to be eyeing potential mergers and acquisitions to broaden its operational base. While this points to forward-looking strategic efforts, the challenges of integration and cost management post-acquisition can’t be overlooked. Investors are weighing these endeavors’ potential against the immediate risks.

More Breaking News

Labor Unions and Contract Negotiations

Labor negotiations always have the potential to disrupt operations and increase labor costs. Cleveland-Cliffs, currently amidst contract discussions, must chart a delicate course. The outcome of these negotiations might fundamentally alter business cost structures, with the potential for strikes posing a further complication.

Commodity Price Volatility

Iron ore, the lifeblood of Cleveland-Cliffs’ operations, has been a roller coaster of price volatility. With geopolitical tensions and fluctuating global demands, the price swings are enough to make heads spin. Cleveland-Cliffs must brace itself and strategize accordingly, ensuring supply chain adaptability and risk mitigation.

Future Outlook: Paths Forward

Navigating through volatile markets isn’t new terrain for Cleveland-Cliffs. Yet, with every unpredictable twist, traders and analysts alike question the direction. The current happenings have outlined clearer paths, but the uncertainty lingers. Never has the question of watching and waiting versus taking decisive trading action been as pertinent.

Traders, now with full visibility into Cleveland-Cliffs’ financial fabric and marketplace context, must decide: is the decline a signal to seize an opportunity or to proceed with caution? The unfolding economic tableau will determine their course. As millionaire penny stock trader and teacher Tim Sykes says, “The goal is not to win every trade but to protect your capital and keep moving forward.”

In today’s financial theater, Cleveland-Cliffs’ roller coaster journey promises not just lessons, but stories of resilience, adaptability, and strategic foresight. The stakes, as always, are as real as the steel itself.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

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* 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 .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

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”