Albemarle Corporation. Depository Shares Update and Technical Analysis
Albemarle is starting off March by giving back nearly half of its February gains after the company announced a depository shares offering valued at $1.75B. The stock surged more than 20% last month due to lithium price increase, but investors are now afraid that the company is short on cash. Looking at their annual revenue, they’re growing in a healthy direction, growing 31% YoY in 2023. However while analyzing their net income, we see the company has been declining in profitability. Their first quarter performance last year reflected a positive $1.16B in net income, but by Q4 they moved to nearly -$1B. While their balance sheet is healthy with $18B in assets and only $8B in liabilities, their free cash flow has been moving south, reading -$823M for 2023. All in all, the depository shares seem like a plea for help to investors, causing this panic selling.
Technical analysis:
ALB’s move in February placed its daily candle above the 50 and 100 day moving averages (Not shown in chart above). These timeframe are often used by institutional investors as guidance. Despite today’s pull back, the stock is trading day above those levels, you can use them as your bullish support.