Molycorp Drops After CEO Resigns
Rare earth mining company Molycorp (NYSE: MCP) announced Tuesday that its Board of Directors had replaced the company's President and CEO, Mark Smith.
Constantine Karayannopoulos, a professional engineer, will temporarily replace Smith as President and CEO while the Board searches for a permanent replacement. Karayannopoulos' record includes a tenure as President and CEO of Neo Material Technologies from 2005 up until this year. He also served as Vice President and General Manager of the rare earths division while at Neo Materials, making him an ideal candidate to helm Molycorp.
Molycorp's Chairman, Ross Bhappu, stated that the company's board “believes Molycorp is at a natural inflection point, as it transitions its focus from development to ongoing operations, to bring in a proven business leader with industry experience, a track record of operational excellence and management experience to execute Molycorp's strategy.”
Laurence Balter, an analyst at Oracle Investment Research, said that the move should be viewed positively. "The board made the move to show the market that they care about the share price, that poor results will not be tolerated."
However, the market didn't seem to take it that way: Molycorp's shares slumped five percent on Wednesday.
Given the ongoing SEC issues and sudden departure of the company's CEO, shareholders may have reason to be alarmed. The performance of the company's stock has been abysmal since the summer of 2011, when Molycorp was trading above $70 per share.
Still, as seen in recent sessions, traders playing the company from the short side might be just as disadvantaged: the stock is prone to powerful short squeezes.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.