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Cleveland-Cliffs Faces Challenges Amid Trade War

Bryce TuoheyAvatar
Written by Bryce Tuohey Reviewed by Tim Sykes Fact-checked by Matt Monaco
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The market is reacting to news that Cleveland-Cliffs Inc. rejected a revised takeover offer from Esmark Inc., and a separate matter involving a factory accident could also be weighing on investor sentiment. On Tuesday, Cleveland-Cliffs Inc.’s stocks have been trading down by -4.43 percent.

What the Market is Saying

  • New tariffs could rock Cleveland-Cliffs and other steel companies owing to the actions of U.S. President Donald Trump.
  • Cleveland-Cliffs was impacted by Canada hitting C$12.6B of U.S. steel with tariffs, adding extra strain to CLF.
  • A global steel demand crisis is brewing with Cleveland-Cliffs witnessing severe revenue dips and transitioning to significant losses.

Candlestick Chart

Live Update At 17:03:23 EST: On Tuesday, March 18, 2025 Cleveland-Cliffs Inc. stock [NYSE: CLF] is trending down by -4.43%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Recent Financial Struggles and Earnings Report

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Cleveland-Cliffs Inc., known for its iron ore mining and steelmaking, is navigating treacherous financial waters. According to their earnings report, the fourth quarter of 2024 wasn’t promising. Revenues dropped alarmingly, aggravated by an intense slump in steel demand – the worst since 2010. Also troubling is the swing from a small profit to deep losses. The company’s endeavor to bounce back is fraught with hurdles.

Looking closer at the numbers, their Q4 revenues fell short of analyst expectations. With actual figures at $4.33B against the predicted $4.40B, it indicates a gap, albeit small, that could shift investor sentiments. This discrepancy, however minor, embodies their broader struggle against falling steel prices and heavy steel imports.

More Breaking News

From a financial stability perspective, the company’s debt levels are concerning. With a total debt to equity at 1.06, Cleveland-Cliffs leans heavily on borrowed funds. Coupled with an operational cash shortfall of about $472M and negative net income of $447M by the end of 2024, the figures paint a pressing picture for the company’s growth prospects.

Examining Key Financial Metrics

A snapshot of Cleveland-Cliffs’ financial indicators shows margins under pressure. EBIT margins dipped to -4.8%, and profit margins are unsustainable at -3.93%. Despite this, they managed robust revenue support from past years, showing a revenue growth rate of 57.33% over five years. However, current valuations depict a price-to-sales ratio of 0.26 and an alarmingly negative price-to-cash flow ratio, signaling potential vulnerability.

The next leg of growth lies heavily on iron ore prices rebounding and navigating through trade challenges effectively. Their present fiscal report is not encouraging current positions, urging the need for strategic financial realignment.

Economic Impact of Recent News Articles

An apparent unease had already been brewing in CLF’s market space, fueled by the global trade war situation. The story of U.S. President Trump’s aggressive trade tariffs has rocked steel and aluminum sectors, impacting Cleveland-Cliffs and its competitors.

Canada’s move to retaliate by imposing tariffs on $12.6B of U.S. steel directly adds to Cleveland-Cliffs’ woes. This geo-economic tension amplifies the vulnerability of steel companies open to global market forces. If the situation spirals, it might limit Cleveland-Cliffs’ market reach and compromise operational profitability.

The forecasted steel rebound in 2025 brings a ray of hope but also uncertainty. If the global economic narrative doesn’t align in favor of steel demand, Cleveland-Cliffs might face prolonged distress. This makes understanding their core financial mechanics pivotal, given market dynamics and policy volatility.

Conclusion and Strategic Outlook

In conclusion, Cleveland-Cliffs is navigating rough waters. Their financial report mirrors an entity grappling with externalities beyond its control. Global trade tussles present threats not just to the EU and Canada but to every link in the interconnected economy.

An insightful focus on strategic management and innovative steelmaking approaches could play a critical role in sustaining Cleveland-Cliffs. Traders should track policy shifts and future earnings closely to understand Cleveland-Cliffs’ market direction, keeping abreast of trade regulations’ long-reaching effects on production costs. As millionaire penny stock trader and teacher Tim Sykes says, “You must adapt to the market; the market will not adapt to you.” This mantra is crucial for anyone watching Cleveland-Cliffs’ journey through the volatile steel industry.

Overall, Cleveland-Cliffs represents a bearishly intriguing story. Their market rate volatility balances between potential industry growth and immediate operational challenges. It remains to see how Cleveland-Cliffs will stand resilient, or if they crumble under the pressure of expansive global trade dynamics.

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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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.

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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”