Critical Metals Plummets 11% Amid JV Doubts and Short-Seller Skepticism

Summary
• Critical Metals (CRML) tumbles 11.28% to $9.1648, erasing $1.17 from its value in under 6 hours.
• A 50/50 joint venture with Romania’s FPCU aims to build a rare earth supply chain but faces scrutiny over execution risks.
• NINGI Research’s bearish report questions the Tanbreez project’s viability, sparking investor panic.
• Options activity surges, with 45 contracts traded on the 12/19 put at $9 strike, signaling bearish positioning.
Today’s plunge in CRML reflects a perfect storm of regulatory skepticism, strategic ambiguity, and volatile options trading. The stock’s intraday range from $10.01 to $9.01 underscores extreme short-term uncertainty, as investors weigh the merits of its European rare earth ambitions against mounting doubts.

Short-Seller Skepticism and Strategic Uncertainty Weigh on CRML
The sharp selloff in CRML stems from a dual blow: NINGI Research’s bearish report questioning the Tanbreez project’s promotional claims and lingering doubts about the Romanian joint venture’s execution. The report highlights the company’s revenue-to-valuation disconnect (price-to-sales ratio of 1,859.14) and warns of regulatory risks if the project’s claims are overstated. Meanwhile, the 50/50 JV with FPCU, while strategically bold, lacks immediate financial commitments from CRML, raising concerns about its ability to fund the processing plant. The market’s reaction—dropping 11.28% despite a $20M copper acquisition in November—reflects a loss of confidence in management’s ability to deliver on long-term value.

Rare Earth Sector Under Pressure as MP Materials Slides 3.5%
The rare earth sector faces headwinds as MP Materials (MP), a key player in neodymium-iron-boron magnet production, declines 3.51%. CRML’s 11.28% drop outpaces MP’s decline, highlighting CRML’s vulnerability to short-term skepticism. While MP’s decline reflects broader sector jitters over China’s dominance, CRML’s selloff is more tied to project-specific doubts. The sector’s underperformance underscores the fragility of rare earth stocks amid geopolitical tensions and execution risks.

Bearish Options and ETFs Signal Short-Term Volatility
• iShares Lithium Miners and Producers ETF (ILIT): Price $15.57, -0.388%
• Vanguard Russell 2000 Value ETF (VTWV): Price $163.185, +0.628%
• MACD: -0.396 (bearish divergence), RSI: 65.26 (overbought), Bollinger Bands: $6.41–$10.69 (price near lower band)
• 200-day MA: $5.33 (far below current price), 30-day MA: $9.47 (resistance near $9.50)
CRML’s technicals paint a bearish picture. The stock trades near the lower Bollinger Band, with RSI suggesting overbought conditions and MACD in negative territory. Short-term traders should watch the $9.00–$9.50 range for potential bounce or breakdown. The iShares Lithium Miners ETF (ILIT), down 0.39%, offers a leveraged play on rare earths but faces headwinds from CRML’s selloff.
Top Options Picks:
1. CRML20251219P9 (Put, $9 strike, 12/19 expiry):
• IV: 140.63% (extremely high volatility)
• Leverage: 12.24% (moderate)
• Delta: -0.418 (mid-range sensitivity)
• Theta: -0.0225 (moderate time decay)
• Gamma: 0.1828 (high sensitivity to price swings)
• Turnover: 3,420 (liquid)
• Payoff at 5% downside: $0.58 (max profit if CRML drops to $8.70).
This put option stands out for its high gamma and IV, offering outsized gains if CRML continues its decline. The moderate theta ensures time decay isn’t a major drag.
2. CRML20251226P9.5 (Put, $9.50 strike, 12/26 expiry):
• IV: 121.32% (high volatility)
• Leverage: 8.12% (moderate)
• Delta: -0.497 (strong bearish bias)
• Theta: -0.0142 (low time decay)
• Gamma: 0.1660 (high sensitivity)
• Turnover: 1,303 (liquid)
• Payoff at 5% downside: $0.48 (profit if CRML hits $8.70).
This contract balances high IV with low theta, making it ideal for a short-term bearish bet. The $9.50 strike offers a tighter profit zone if the selloff accelerates.
Aggressive bulls may consider CRML20251226C10 (Call, $10 strike, 12/26 expiry) into a bounce above $9.50.

Backtest Critical Metals Stock Performance
The iShares Core MSCI All World ex USA ETF (CRML) has demonstrated resilience following a -11% intraday plunge from 2022 to the present. Backtesting reveals a 3-day win rate of 47.08%, a 10-day win rate of 53.75%, and a 30-day win rate of 57.92%, indicating a higher probability of positive returns in the short term. The average 3-day return is 1.39%, the 10-day return is 4.69%, and the 30-day return is 14.18%, suggesting that CRML tends to recover and even exceed its initial levels after a significant downturn.

CRML’s Plunge: A Buying Opportunity or a Warning Shot?
Critical Metals’ 11.28% drop reflects a mix of short-term panic and long-term uncertainty. While the Romanian JV and Tanbreez project hold strategic promise, execution risks and NINGI’s bearish report have eroded investor confidence. The stock’s technicals—trading near the lower Bollinger Band with overbought RSI—suggest a potential rebound near $9.00–$9.50. However, the bearish options activity and MP Materials’ 3.51% decline indicate sector-wide caution. Investors should monitor the $9.00 support level and the Romanian JV’s progress. For now, short-term traders may favor the CRML20251219P9 put for a bearish play, while longer-term investors could consider a dip below $9.00 as a potential entry point.