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Cleveland-Cliffs Faces Challenges: What’s Next?

Bryce TuoheyAvatar
Written by Bryce Tuohey Reviewed by Tim Sykes Fact-checked by Matt Monaco
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Cleveland-Cliffs Inc. is facing heightened scrutiny following the Justice Department’s examination of possible price manipulation of their iron ore products. This development likely contributed significantly to investor anxiety, as reflected in the market’s reaction. On Tuesday, Cleveland-Cliffs Inc.’s stocks have been trading down by -3.72 percent.

Market Impact

  • In a recent report, Cleveland-Cliffs projected their Q4 revenue to hit $4.3B, but they missed the market’s expectations of $4.44B, highlighting an $85M adjusted EBITDA loss.
  • Steel shipments for Q4 amounted to 3.8M net tons, and the company successfully completed its acquisition of Stelco Holdings, triggering mixed reactions in the market.
  • Morgan Stanley lowered Cleveland-Cliffs’ stock price target from $13 to $11 while keeping an Equalweight rating, causing some investor concern about future valuations.
  • A preliminary analysis showed Cleveland-Cliffs’ annual revenue declining, failing to meet analysts’ expectations, which could strain the company’s market outlook.

Candlestick Chart

Live Update At 17:20:34 EST: On Tuesday, February 11, 2025 Cleveland-Cliffs Inc. stock [NYSE: CLF] is trending down by -3.72%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Recent Earnings and Financial Overview

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Let’s dive into Cleveland-Cliffs’ recent financial performance, starting with a glance at their key financial metrics. The company’s financial strength shows a total debt-to-equity ratio of 0.55, indicating how they use equity to finance operations. Moreover, the total assets clocked in at an impressive $16.8B, though accompanied by some financial learning curves.

Their Q4 earnings weren’t as shiny as investors would have liked. The operating income took a hit, standing at a loss of $259M with revenue missing the forecast by nearly $0.14B, ushering in a wave of cautious optimism among stakeholders. Despite strong performance in past quarters, the latest numbers foreshadow embracing strategic maneuvers to navigate these financial hiccups.

More Breaking News

Key figures include a profitability ratio with an EBIT margin of -1.8% indicating operational challenges, however, the gross margin at 50.6% showcases an area where Cleveland-Cliffs fares well despite overall hurdles. With liquidity ratios like the current ratio at 1.9 bolstering optimism, investors eye the company’s cash flow management strategies keenly.

Extended Analysis: Factors Influencing CLF

Examining Cleveland-Cliffs’ latest performance, some intriguing strategic maneuvers alongside fluctuating market dynamics influence its trajectory. Their recent acquisition of Stelco Holdings is a noteworthy stride aiming to harness the steel market forces. This move, albeit promising long-term growth, temporarily strained the Q4 balance sheets.

Market reaction to Morgan Stanley’s stock price target revision played an influential role. Reducing the target reflects ongoing market skepticism about CLF’s near-term trajectory, sparking shifts in investor outlook. Such analyst ratings frequently serve as beacons for retail and institutional investors in determining their financial plays regarding CLF stock.

A lens into their historical chart data reveals noticeable fluctuations post-earnings disclosure. The recent trading sessions saw highs reaching $12.26 before witnessing declines to as low as $10.04. This fluctuation portrays the market’s turbulent sentiment post-earnings release, entwined with strategic acquisition decisions.

Exploration of Related News

Several developmental facets underscore Cleveland-Cliffs’ current positioning, deeply entwined with recent news surges. The sell-side miss in earnings predictions coincides with broader external influences marking steel industry fluxes.

Steel demand and pricing volatility directly impact CLF. Their financial outcomes stem partly from marketwide shifts where demand slips amidst broader economic disruptions or supply chain reshuffles playing out globally. This ripple effect touches CLF’s top and bottom lines, creating strategic dialogues around market adaptability and resilience.

Despite short-term downtrends in Q4, the company’s move to integrate Stelco Holdings bolsters operational depth and competitive edge, pivotal for shaping future stability. Though their journey through near-term fiscal troughs grapples with headwinds, investor focus remains fixed on overriding strategic initiatives laying reinforcements for a potential rebound.

Conclusion

Cleveland-Cliffs finds itself at a crossroads navigating fiscal complexities alongside transformative opportunities. The road ahead demands vigilant focus amidst evolving analyst sentiment and economic tides shaping their trajectory. As millionaire penny stock trader and teacher Tim Sykes says, “Small gains add up over time; focus on building wealth gradually, not chasing jackpots.” Traders and stakeholders await Cleveland-Cliffs’ strategic maneuvers in reshaping operative efficiencies while reinforcing resilience to anticipated market shifts.

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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”