As the coal industry’s troubles prolong, Peabody Energy Corporation (NYSE:BTU) is facing a difficult time as investor confidence seems to be at an all-time low. Over the past 12 months, the stock has fallen by 92.65%.
Since January 1, 85.12% of the coal miner’s market capitalization has washed away, as it goes through the darkest phase in its history. Last month, Peabody received a major blow when Moody’s Investor Service downgraded its credit rating in the midst of its financial struggles, as the credit rating agency expects its credit metrics to further weaken. Furthermore, Moody’s maintained a negative outlook for Peabody Energy, warning that “any material recovery” is unlikely before the end of 2016.
On June 30, Peabody warned its investors that its financial results, scheduled to be released on July 28, may contain larger losses than previously expected. The announcement triggered a sell-off, as the stock dipped 12.75% the same day.
As power generation companies continue to opt for natural gas, which is cheaper and burns with lower carbon emissions than coal, investor sentiment about Peabody has largely been negative.
Last Friday, after China’s Energy Administration released its coal statistics for the first half of 2015, the stock fell 8.5% as investors reacted to the numbers. The report revealed that while electricity demand increased 1.3% year-over-year (YoY), from January to June, coal consumption declined by 5%. In contrast, coal consumption fell only 3% during 2014. Chinese electricity producers’ preference away from coal has worsened the industry’s woes. Furthermore, the country’s coal imports fell 38% during the first six months of 2015.
Last week, the company received news that it is being sued for potential violation of the Employee Retirement Income Security Act of 1974, concerning its 401 (k) plan. Peabody is also being sued by United Mine Workers, a pension fund, over a nearly $800 million dispute.
The downturn momentum that led to a loss in stock price on Friday has carried onto Monday’s trading session, as Peabody’s shares are trading in red during the opening hours at the New York Stock Exchange. As of 10:45 AM EDT, Peabody’s stock has fallen 10.47% to reach $1.15; its all-time low level.