- Hycroft Mining stock soared on Tuesday as AMC takes a stake.
- Hycroft Mining was making headlines on social media as well as CNBC.
- HYMC shares opened up nearly 100% on Tuesday but closed up 9%.
Hycroft Mining (HYMC) was not a name many of us were familiar with before Tuesday when the stock supercharged its way higher as retail traders piled into the name. Hycroft Mining is as the name suggests a mining stock with one mine in Nevada producing gold and silver. Gold had been a top-performing asset since the Russia-Ukraine conflict kicked off, but that still was not the reason for the super spike.
Hycroft Mining Stock News
The real news was an investment by noted metal investor AMC Entertainment. A touch of sarcasm perhaps, but I do not think anyone saw that one coming. I cannot think of a more left-field diversification from another stock in all my time in the market. AMC CEO Adam Aron was on the wires speaking about the investment and pointed out that HYMC was just like AMC one year ago, struggling for cash.
Indeed, Hycroft is not exactly in a healthy financial position. This appears to be a tough mine with costs of extraction looking too high and dwarfing any revenues from the mining operation. HYMC has not turned a profit since 2013. Despite this, the AMC apes, retail traders or someone saw fit to pile into HYMC stock, and it spiked 100% higher just on the open of the regular session on Tuesday.
Adam Aron was due to appear on CNBC to discuss the investment but had to pull out for fear of stoking the frenzy even more. The frenzy quickly died down, and HYMC lost about 90% of its intraday highs to close at $1.52 for a gain of 9.35%. Of course, the reason was a Bloomberg report suggesting HYMC could do a share offering as early as Tuesday. HYMC is listed to sell up to $500 million in share offerings, which would be extremely dilutive.
Hycroft Mining Stock Forecast
On Tuesday FXSteet was blunt enough in our assessment when we said to avoid HYMC stock. We would have been blunter, but this is a family site. so we have to mind our Ps and Qs. Suffice to say this was another frenzy, which quickly died down. HYMC is loss-making and as mentioned has not turned a profit since 2013. HYMC needs cash to survive, so I suppose AMC has provided this, and it is not too significant as CEO Aron alluded to. Still this is a little too left-field for our liking.
This probably keeps HYMC afloat though. CNBC reports that back in November the company said it needed to raise capital to meet its financial obligations and that it laid off half of its workforce at the Nevada mine, which is not exactly comforting from an investment point of view. This is distressed, high-risk investing. If you are looking for optimism, I suppose this investment and capital raise keeps the company afloat.
HYMC stock chart, daily
The author is long puts in HYMC.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.