Why AK Steel Holding Corporation's Shares Plunged Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares of AK Steel Holding Corporation dropped as much as 10% today after the company provided first-quarter guidance that fell well short of expectations.

So what: Management said it expects to ship about 1.73 million tons of product in the first quarter of 2015, down 14% from the fourth quarter of 2014. They also expect to lose $0.23 to $0.28 per share, well below the current Wall Street estimate of a penny-per-share profit.

Now what: An excess of global capacity continues to pressure steel prices, and AK Steel's management even said it thinks "unfairly traded imports" were partly to blame for their weak quarter. No matter the cause, AK Steel has reported losses each of the last three years, and that trend doesn't look to be changing anytime soon. I wouldn't be buying the dip in shares today because I just don't see any catalysts that will either reduce supply or improve demand in the near future. This is just too big a risk to take today, as far as I'm concerned.

The article Why AK Steel Holding Corporation's Shares Plunged Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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