Will Freeport Stock Fall Further?

The stock price of Freeport-McMoRan (NYSE: FCX) one of the largest producers of copper, has declined by about 11% over the last week (five trading days) and remains down by 17% over the last month. This compares to the S&P 500 which remains down by about 1% over the last month. Copper prices are down from a high of about $4.86/lb in early March 2022 to about $3.74/lb currently, marking a decline of almost 24%. There are a couple of factors weighing on the commodity, including China’s zero-Covid policy, which has resulted in stringent lockdowns in several provinces, hurting demand. Moreover, the U.S. Federal Reserve and other global central banks have also been hiking interest rates at a more aggressive pace to combat surging inflation, and the markets are betting that this will hurt global growth. The construction and electrical applications sectors – which are the largest consumers of copper – typically see activity cool off during downturns and this could impact demand and pricing for the metal.

However, now that FCX stock has seen a decline of about 17% over the last month, will it continue its downward trajectory in the near term, or is a rally imminent? Going by historical performance, there is a roughly equal chance of a rise or decline in FCX stock over the next month. Out of 213 instances in the last ten years that FCX stock saw a twenty-one-day decline of 17% or more, 109 of them resulted in FCX stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 109 out of 213, or about 51% chance of a rise in FCX stock over the coming month, implying a neutral near-term outlook for the stock. See our analysis on  Freeport-McMoRan Stock Chance of A Rise for more details.

While FCX stock has declined recently, several peers in its sector still look like a better bet than Freeport. Check out how Freeport Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data

• After moving -11% or more over five days, the stock rose in the next five days on 49% of the occasions.
• After moving -24% or more over ten days, the stock rose in the next ten days on 45% of the occasions
• After moving -17% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 51% of the occasions.

This pattern suggests that FCX stock is unlikely to see gains in the near term.

With inflation rising and the Fed raising interest rates, Freeport has fallen 26% this year. Can it drop more? See how low can Freeport stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

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[1] Month-to-date and year-to-date as of 6/27/2022
[2] Cumulative total returns since the end of 2016

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