FSM - Why This $5 Silver Stock Sank 20% in June and Is Heading Lower
Shares of Fortuna Silver Mines (NYSE: FSM) sank 20.1% in the month of June, according to data provided by S&P Global Market Intelligence . With that drop, the silver mining stock gave up all of its gains from May and then some, and the stock isn't done just yet: It's already down about another 7% so far in July. The company's recent acquisition, even as silver prices got whacked, didn't go down well with the market.
Earlier in April, Fortuna Silver announced its plan to acquire Canada-based gold mining company Roxgold in a stock-and-cash deal valued at nearly 1.1 billion Canadian dollars. That represented a steep 42% premium to Roxgold's last closing price on the Toronto Stock Exchange. The higher premium didn't sit well with investors, and they dumped Fortuna Silver shares soon thereafter.
Fortuna Silver, however, managed to win back investor confidence when it reported its highest-ever quarterly net income in May. With silver prices also rising meanwhile, investors hoped the Roxgold acquisition would unlock greater value. Between April and May alone, silver prices rallied nearly 20%, which partly explains why Fortuna Silver shares rallied double-digits in Ma y.
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Why This $5 Silver Stock Sank 20% in June and Is Heading Lower