What happened
Uranium Energy (UEC 2.66%) stock cracked on Monday and sank as much as 13.2% as of 12:20 p.m. ET. Today's drop brings the red-hot uranium stock's unstoppable rally to a grinding halt -- Uranium Energy shares had jumped a whopping 90% since Feb. 1 through the end of last week.
So what
Ironically, the price of uranium is soaring even as I write this. In fact, uranium spot prices have hit their highest level since March 2011 and are hovering around $60 per pound, according to TradingEconomics.com.
March 11, 2011 was an historical day that overturned the growth story for uranium companies, thanks to a major earthquake that caused one of the world's worst nuclear accidents yet at Japan's Fukushima Daiichi nuclear power plant. Japan shut down its nuclear reactors and sounded the death-knell for companies in uranium, a key fuel used in nuclear reactors.
Image source: Getty Images.
With the Russia-Ukraine war escalating and prices of oil and gas surging in recent days, the focus is back on nuclear-energy's viability as a clean alternative fuel to secure future global-energy supply. Speculation about the U.S. weighing sanctions on uranium further fueled fears of a disruption in the supply of uranium, and all of these factors combined to drive uranium prices and uranium stocks higher.
This morning, though, oil and gas prices are falling back to the ground as negotiations between Russia and Ukraine have reportedly gathered steam, even as China -- the world's largest importer of oil -- has imposed stringent lockdown measures in the wake of rising coronavirus cases.
With oil and gas prices falling, investors in uranium perhaps fear the attention on nuclear energy could wane, and that's compelling many to take profits off the table, especially in high-flying stocks like Uranium Energy.
NYSEMKT: UEC
Key Data Points
Now what
Even before uranium prices shot through the roof, Uranium Energy caught the market's attention last month when it declared itself a debt-free company barely weeks after acquiring Uranium One, the world's fourth-largest uranium producer that owns production-ready assets. It's a big deal as Uranium Energy itself isn't generating any revenue.
Yet, while these facts about Uranium Energy are intact, investors are worried about how far the stock can go from here after its stunning recent rally. Even after today's drop, Uranium Energy is trading at a market capitalization of nearly $1.3 billion.
