Down 24% since April, have investors fallen out of love with Lynas shares?

The Lynas Rare Earths Ltd (ASX: LYC) share price has had a rough trot of late. It has tumbled 24% from its April peak of $11.59.

At the time of writing, the Lynas share price is trading at $8.805, 0.8% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is falling 2% right now.

Has the market turned on the Lynas share price following last year’s mammoth 155% surge?

Let’s take a look.

Has the Lynas share price’s moment in the sun ended?

The Lynas share price was one of the 2021 stars of the ASX 200, launching 155% over the course of last year. But the market appears to have turned on the rare earths giant in 2022.

And Fat Prophets founder and CEO Angus Geddes says he knows why.

Geddes told The Bull that the stock’s monumental rise was driven by soaring rare earths prices. But the value of rare earths has begun to ease amid inflationary pressures.

On top of that, he said the company’s sales are slowing while its costs are rising. Its cash costs reportedly jumped 35% to $341 million last financial year.

As my Fool colleague Tony Yoo reported last week, the company’s latest earnings saw its price-to-earnings (P/E) ratio more than halve.

The company sold 15,263 tonnes of rare earths oxide in financial year 2022, marking a 7% year-over-year fall. Meanwhile, its cost of sales lifted 15% to $348.4 million.

However, Lynas’ average realised price last financial year was $60.3 per kilogram – a 102% improvement – which saw its cash receipts lift 84% to $855 million. The company’s production volume also rose 1% to 15,970 tonnes.

If prices have eased as Geddes notes, Lynas’ bottom line may receive a notable dint with the impact potentially reverberating through to its share price. He has slapped Lynas shares with a sell recommendation.

But not all experts agree with the negative assessment.

Datt Capital chief investment officer Emanuel Datt said Lynas is “the gold standard” when it comes to producers of the minerals, as Yoo reported earlier this week.

The fundie also warned that China could restrict supply of rare earths, likely causing a global shortage that could see prices soar.

The Lynas share price is down 20% year to date. Though, it has gained 30% since this time last year.

Meanwhile, the ASX 200 has dumped 10% year to date and 9% over the past 12 months.

The post Down 24% since April, have investors fallen out of love with Lynas shares? appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in September 2022
• 5 ASX shares that could rocket from a rare earths crisis: expert
• Guess which ASX All Ords share rocketed 15% on a rare earths deal with Twiggy Forrest
• Lynas share price lifts off on rocketing FY22 profits
• Lynas share price on watch after 244% profit jump, doubling revenue

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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