American Resources Plummets 28% Amid $33M Financing and Rare Earth Sector Turbulence

Summary
• American Resources (AREC) trades at $4.875, down 28.4% from $6.81 after opening at $6.125
• Intraday range spans $4.57 to $6.155 on 30.7 million shares
• $33M PIPE at $3.55/share and China’s rare earth export curbs dominate headlines
• Sector peers like MP Materials (-7.99%) signal mixed momentum

Today’s 28% plunge in American Resources reflects a collision of capital market dynamics and geopolitical headwinds. The stock’s collapse follows a $33 million PIPE at $3.55/share—well below the $4.875 intraday price—and intensifying global scrutiny over rare earth supply chains. With China tightening export controls on 12 rare earth elements, investors are recalibrating risk in the sector, sending ripples through AREC’s valuation and execution timeline.

Capital Flight Amid Execution Risks
The 28.4% drop in AREC stems from a combination of dilutive financing and skepticism over commercialization timelines. The $33 million PIPE at $3.55/share—below the current $4.875 price—signals immediate shareholder dilution, eroding confidence in the company’s ability to monetize its 120 million tons of coal waste deposits. Compounding this, China’s recent export restrictions on 12 rare earth elements (including neodymium and dysprosium) have heightened concerns about global supply chain vulnerabilities. Investors are now pricing in execution risks: scaling processing hubs, converting coal waste into saleable concentrates, and navigating environmental permitting hurdles. The stock’s collapse reflects a loss of faith in the company’s ability to navigate these challenges while maintaining profitability.

Rare Earth Sector Volatility Intensifies
The rare earth sector is under siege as China’s export curbs ripple through global markets. MP Materials (MP), the sector’s largest U.S. processor, fell 7.99% on Monday, mirroring AREC’s panic. With China controlling 70% of U.S. rare earth imports, the sector faces a dual threat: geopolitical leverage and domestic production bottlenecks. AREC’s coal-based extraction model—while faster than greenfield mining—now competes with a backdrop of restricted access to critical materials. The sector’s volatility underscores a broader theme: U.S. companies are racing to build self-sufficiency, but execution gaps and regulatory hurdles remain significant headwinds.

Options Playbook for a Volatile Sector
• MACD: 0.786 (bullish divergence), Signal Line: 0.512, Histogram: 0.275 (momentum waning)
• RSI: 88.4 (overbought, reversal likely)
• Bollinger Bands: $5.51 (upper), $3.43 (middle), $1.35 (lower)—price near lower band
• 200D MA: $1.21 (far below current price)
• Support/Resistance: $1.80–$1.90 (30D), $0.66–$0.79 (200D)

AREC’s technicals paint a picture of exhaustion. The RSI at 88.4 suggests overbought conditions, while the MACD histogram’s decline indicates fading momentum. Bollinger Bands show the stock trading near the lower band, hinting at a potential rebound. However, the 200-day MA at $1.21 and key support levels below $2.00 suggest a bearish bias in the near term.

Top Options Contracts:
• AREC20251121P5 (Put, $5 strike, Nov 21 expiry):
- IV Ratio: 210.62% (extreme volatility)
- Delta: -0.375 (moderate sensitivity)
- Theta: -0.013 (time decay)
- Gamma: 0.114 (price sensitivity)
- Turnover: $501,506 (liquid)
- Leverage Ratio: 3.64%
- Payoff at 5% Downside: $0.125 (max(0, 4.63 - 5))
- Why: High IV and moderate delta make this put ideal for a short-term bearish bet. The 3.64% leverage amplifies returns if the stock breaks below $5.

• AREC20251121C5 (Call, $5 strike, Nov 21 expiry):
- IV Ratio: 230.57% (extreme)
- Delta: 0.638 (high sensitivity)
- Theta: -0.0199 (rapid decay)
- Gamma: 0.103 (price sensitivity)
- Turnover: $1.78M (liquid)
- Leverage Ratio: 3.51%
- Payoff at 5% Downside: $0 (max(0, 4.63 - 5))
- Why: Despite the bearish scenario, this call’s high delta and IV offer a speculative play on a rebound. The 3.51% leverage could work if the stock rallies above $5 before expiry.

Action: Aggressive bears should prioritize AREC20251121P5 for a 5% downside scenario. Bulls may consider AREC20251121C5 as a high-risk, high-reward trade if the stock stabilizes above $5.

Backtest American Resources Stock Performance
It looks like the back-test engine stopped because the event-date file we generated is empty – in other words, AREC has not experienced a single day between 2022-01-01 and 2025-10-15 where the closing price finished 28 % or more below the previous day’s close. Because the engine needs at least one event to evaluate “after-plunge” performance, it returned the error you saw.Two ways we can proceed:1. Adjust the definition of a “plunge” • Use a smaller close-to-close threshold (e.g. –20 % or –15 %). • OR keep –28 % but measure from the prior close to the current day’s intraday low (high-to-low drawdown). 2. Examine a different period or add earlier history (e.g. 2017-2021) to capture any rarer extreme drops.Let me know which approach you prefer (or supply a different threshold), and I’ll rerun the event extraction and back-test for you.

A Race Against Time for Rare Earth Independence
The 28% plunge in AREC underscores the fragility of U.S. rare earth ambitions in the face of Chinese dominance and execution risks. While the $33M financing provides capital, it also signals shareholder dilution and operational pressure. Investors must watch for key inflection points: processing hub deployment, first deliveries to ReElement Technologies, and regulatory responses to China’s export curbs. MP Materials’ -7.99% decline highlights sector-wide vulnerability. For AREC, the path forward hinges on scaling coal waste processing and proving commercial viability. Act now: Short-term bears should target AREC20251121P5, while bulls may test the $5 support level with AREC20251121C5. The rare earth race is on—will U.S. firms outpace China’s leverage, or will volatility persist?