If you own stock in Syrah Resources Limited [ASX:SYR], 2018 has not been kind to you.
You probably wince when you look at the past few months of price movements, which have gone in one direction. Down.
The resource and technology company’s stock has been slashed by nearly 50%. This may come as a surprise — an Australian-based mining corporation not sharing in the resurgence of global demand?
It was only six months ago, around Christmas, when investors were enjoying both the warm holiday glow, and a significant uptrend in SYR. The price peaked at $4.830 on Friday, 5 January — today, it stands at 2.775. That’s after a 2.29% decline today…
Why did this happen to Syrah’s shares?
Recent terror attacks in Mozambique are cause for headaches among Syrah’s executives. While the company has reported uninterrupted activity, the continued fear that turmoil could spread to mining areas is likely making investors skittish and weighing on SYR.
After the hostilities, the stock nosedived again with the announcement of US and Australian travel warnings for the Cabo Delgado region — where the large Balama graphite mine is found.
Until executives are able to assure the project’s safety and viability, SYR is likely to keep getting hit.
Furthermore, SYR is the most shorted stock on the ASX. That does not bode well for investors in search of growth opportunities. Shortman.com.au reports that fully 20% on its list expect Syrah Resources stock to drop further.
What’s next for Syrah Resources?
If Mozambique can keep order, SYR stands to skyrocket in coming months.
As the AFR reports:
‘[Investors continue to] weigh up its potential to be the world’s largest and lowest cost producer of a key lithium ion battery ingredient against the sovereign risk in Mozambique, the opaque nature of the graphite market and the usual challenges of bringing a new mine into production.’
So, Syrah has great potential but must successfully navigate a complex market and unstable sovereign conditions to become a break-out performer on the ASX.
The road looks rocky, so we’ll be sure to keep you updated on all the bumps. Check back here for updates.
Editor, Markets & Money
PS: You’ll find over 2,000 stocks listed on the ASX and on any given day a bunch will rise, just like Domain. It’s near impossible to monitor these on your own. Our analyst Vern Gowdie has picked out four Aussie stocks he believes could be top performers in 2018. Download your free copy of his report ‘The Four Best ASX Stocks’ today.