Here's Why Sociedad Quimica y Minera de Chile SA Fell 16.4% in August

What happened

Shares of Sociedad Quimica y Minera de Chile SA (NYSE: SQM) fell more than 16% last month, according to data provided by S&P Global Market Intelligence. The company, also known as SQM, reported second-quarter and first-half 2019 operating results that reflected the numerous headwinds it faces in its core markets.

The lithium segment reported a 25% decline in revenue in the first half of 2019 compared to the year-ago period, while the specialty plant nutrition segment saw revenue decline 11% in that span. That sapped total revenue 14% and gross profit 31% in the year-over-year period.

Image source: Getty Images.

So what

SQM has been prioritizing lithium production in recent years, but the markets haven't been cooperating. Lithium prices have tumbled this year after China announced significant cuts to subsidies for electric vehicles. That has cooled demand for large battery manufacturing facilities in the country, which is responsible for 57% of global lithium demand.

Global agricultural markets are reeling, too. Historic flooding in the United States has led to one of the worst planting seasons ever recorded, which has delayed and diminished purchases of farm inputs such as fertilizers. The trade war between the United States and China hasn't helped, either.

Now what

SQM can only control the factors within reach, which don't include selling prices for lithium or fertilizers. The company has held administrative expenses in check this year and continues to maintain an optimistic long-term outlook, but investors might expect more volatility in the near term. If the business continues to execute, then investors may start to view SQM as a solid value stock at current prices.

10 stocks we like better than Sociedad Quimica y Minera
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Sociedad Quimica y Minera wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 1, 2019

 

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SQM