Why Chemours Stock Is Plunging Today
Chemours (NYSE: CC) surpassed top- and bottom-line quarterly expectations, but investors are more focused on the drama going on behind the scenes. Shares of Chemours traded down 15% as of 10 a.m. ET after the chemicals company said it has received information requests from regulators and prosecutors related to its accounting.
Slow markets and internal issues
Chemours, the maker of Teflon and other chemicals, reported fourth-quarter earnings of $0.31 per share on revenue of $1.4 billion, surpassing the $0.25 per share on sales of $1.32 billion consensus estimate. CEO Denise Dignam called 2023 a "challenging year" due to inventory destocking and economic headwinds, but investors were more focused on the ongoing probe into corporate accounting practices.
In February, Chemours launched an internal audit in response to a tip made to its ethics hotline. The company delayed fourth-quarter results and suspended key execs while it investigated the claims, eventually determining that executives delayed payments and sped collections to make sure cash-flow targets tied to bonus awards were met.
Chemours said its audit found that similar actions had also been taken in the fourth quarter of 2022. Last week, Dignam was named permanent CEO as Chemours tried to put the issues in the past.
In its annual report, Chemours said it was cooperating with information requests from the Securities and Exchange Commission and attorneys from the Southern District of New York about what it found during its review.
Is Chemours stock a buy?
Even without the investigation, Chemours is a stock facing a lot of headwinds right now. The company expects revenue in the current quarter to be flat to down slightly compared to last quarter on continued demand issues.
The probe is a further uncertainty. Although Chemours appears to have acted on the tip instead of trying to cover up the wrongdoing, we don't yet know what the government will find or how long this will be a distraction. Given all of the question marks, investors are wise to shy away from this stock right now.
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Lou Whiteman 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.
Why Chemours Stock Is Plunging Today was originally published by The Motley Fool
