Why Energy Fuels Stock Crashed Today

Energy Fuels (NYSEMKT: UUUU) stock is best known as a play on nuclear energy and a miner of uranium. Shares of the nuclear stock tumbled 11.2% through 10:15 a.m. ET Monday, however.

And the reason had nothing to do with nuclear power.

Image source: Getty Images.

Is the U.S.-China trade war over?

Over the weekend as you may have heard, trade negotiators from the United States and China struck what Treasury Secretary Scott Bessent called "a very successful framework for the leaders to discuss on Thursday." Details are still firming up, but the broad outlines of the agreement include more purchases of U.S. soybeans by China, removal of the threat of new 100% tariffs on Chinese exports, and China's reciprocal removal of its threat to further restrict exports of rare-earth metals to the U.S.

That's good news for many companies, but bad news for companies like Energy Fuels, which has ridden a wave of worry over access to rare earths by touting its own ability to mine the stuff (along with its core product, uranium).

Is Energy Fuels stock a buy?

Hope that Energy Fuels could profit from a supply crunch in global rare earths shipments had helped the stock more than triple in share price this year, but if supplies don't crunch, then much of Energy Fuels' price gains could evaporate.

Adding to investor worry, President Donald Trump has apparently inked separate rare-earth-related agreements with suppliers outside China (but not inside the U.S.). Malaysia in particular, home to some 16 million tons of rare earth deposits, has promised to develop new rare-earth deposits with the aim of selling rare earths to the U.S.

And the more rare earths Malaysia can sell us, the less we'll need from Energy Fuels -- and the dimmer the prospects for Energy Fuels ever turning profitable.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.