Why Shares in Freeport-McMoRan Slumped Again Today
Shares in copper miner Freeport-McMoRan (NYSE: FCX) declined 6.5% by midday ET Tuesday. The move comes as part of a broader market sell-off in stocks and a decline in the miner's essential commodity, copper. Having started June trading at about $4.50 per pound, the price of copper stood at $3.44 per pound today.
The decline reflects investor fears that global growth will slow markedly and take down copper demand. Copper is traditionally seen as a cyclical metal because of its use in construction, electrical networks, industrial machinery, transportation, and consumer products.
Freeport's management believes its earnings before interest, taxation, depreciation, and amortization (EBITDA) and operating cash flow will fluctuate by $425 million and $330 million, respectively, every time there is a $0.10 movement in the price of copper. So, it's understandable if investors are concerned by the rapid decline in the industrial metal.
Source Fool.com
