The world of SPAC (Special Purpose Acquisition Company) has not been investor friendly lately. Sentiment weakened considerably, leading investors to companies like The metals society (NASDAQ:TMC) and TMC stocks a lot more nervous these days.
Well, investors have sought to withdraw their investment in such speculative venture capital (VC) vehicles this year. The Metals Company is one of those de-PSPC companies that has seen significant capital withdrawn from its merger deal in the past. Early-stage investors in TMC shares pulled out a significant amount of equity earlier this month around the date of the merger’s completion. This provided for a rather volatile initial period for investors in TMC shares.
That said, today’s nearly 25% drop in TMC shares is substantial. Let’s take a look at what are the catalysts behind the current decline of this deep sea mining group today.
TMC share drops after key announcement yesterday
Yesterday, The Metals Company announced that it had received its vessel “Hidden Gem” – a 228 meter long vessel – which the company said will be “the first to be classified as an underwater mining vessel by the American Bureau of Shipping. . ” It looks good.
Indeed, as a company focused on deep-sea mining, The Metals Company has received both praise and criticism for its niche. On the one hand, mining above sea level leads to serious environmental problems. Getting approval for new mines has become increasingly difficult. And the ocean floor is full of (literally) untapped potential in this regard.
By shifting environmental concerns to the ocean floor, early investors seemed to believe that the “out of sight, out of mind” approach would be favored by environmentalists. However, there is growing concerns that the damage to the ocean could be just as serious, if not worse, than what is happening above sea level.
It’s a business short sellers seem to be picking on lately. While some on social media platforms call for tightening, it has been difficult for retail investors to reach consensus on this stock. As a result, it is a company that has been badly beaten in recent times.
Can TMC’s stock recover? Will this stock tighten? The answers to these questions remain to be seen. For now, this is a stock with huge bearish momentum that looks too risky to touch.
As of the publication date, Chris MacDonald does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.