Cleveland-Cliffs projects significant loss ahead of earnings announcement

Cleveland-Cliffs Inc. is set to announce its first quarter earnings on May 7, 2025. This announcement comes against a backdrop of concerning financial forecasts where analysts estimate revenues to reach $5.2 billion. However, the consensus points to an anticipated loss of $0.83 per share, primarily driven by dipping steel prices and diminishing demand in key sectors, specifically automotive and construction, which are crucial for the steel market in the United States. As of now, Cleveland-Cliffs' share price struggles with pressures from U.S. hot-rolled coil (HRC) prices, which have plummeted to around $665 per ton. The company’s current market capitalization is approximately $4.0 billion. Over the past twelve months, Cleveland-Cliffs recorded a substantial revenue of $19 billion but faced serious challenges, claiming operational losses amounting to $504 million and an unsettling net income loss totaling $754 million. This operational hurdle reflects broader issues in the steel industry, particularly how external economic factors are affecting profitability, affecting not just Cleveland-Cliffs but the broader market landscape. There is a notable decline in demand, with higher inventory levels and shorter lead times signaling a potentially weak market environment. Historically, Cleveland-Cliffs has seen mixed responses in its stock performance following earnings reports. Over the last five years, the company has recorded 19 data points of earnings reactions, resulting in 10 positive returns and 9 negative returns. In the last three years, positive returns have risen to approximately 55%, indicating some resilience despite recent challenges. Investors frequently analyze these returns to guide their trading strategies, often examining correlations between immediate post-earnings returns and subsequent performance within days or weeks. The current economic climate involves heightened cautiousness among investors, particularly as steel prices continue to fall, thus influencing expectations for not just Cleveland-Cliffs, but also for its peers. The culmination of these challenges suggests that the company’s earnings report is likely to have significant implications for stock movement in the coming days. Observers are closely monitoring not only Cleveland-Cliffs' performance but also how its competitors respond to similar pressures in the market as both sectors collectively navigate through these turbulent conditions in the steel industry.