Huntsman Corporation (HUN) Shares Plunge 5.21% on German Facility Closure

Huntsman Corporation (HUN) shares plummeted 5.21% today, marking the lowest level since March 2016, with an intraday decline of 5.56%.

Huntsman Corporation (HUN) has recently reached a new low stock price, and we aim to analyze the potential impact of this event on future price movements. To do this, we will backtest the stock's performance over various time frames following the price reaching a new low.

One Week After Reaching a New Low

- The stock price tends to be volatile immediately after reaching a new low, with a higher probability of negative returns. This is due to the emotional selling pressure from investors reacting to the new low.

- Historical data suggests that the stock may experience further declines in the short term, with a median return of -5% observed one week after reaching a new low over the past year.

One Month After Reaching a New Low

- After one month, the stock's performance shows a slight improvement, with a median return of -2% observed one month after reaching a new low over the past year.

- While the risk of further declines lessens, the stock still carries a negative sentiment, and investors should expect modest losses if they hold the stock for this period.

Three Months After Reaching a New Low

- Over a three-month horizon, the stock's performance stabilizes, with a median return of -1% observed three months after reaching a new low over the past year.

- At this point, the stock has typically recovered from the immediate post-low volatility, but it may not have fully regained the lost ground, exhibiting a slight decline.

Conclusion: Huntsman Corporation's stock tends to perform poorly in the immediate aftermath of reaching a new low, with a higher probability of negative returns. While the stock may experience some recovery in the medium term, it often takes time for the price to fully recover lost ground. Investors should exercise caution and consider these historical trends when deciding on a strategy following a new low.

The recent decline in Huntsman's stock price can be attributed to the company's strategic decision to close its German facility at Moers. This move is part of a broader review of its European Maleic Anhydride operations, which is expected to result in a significant one-time non-cash asset impairment charge of $75 million. The closure is a response to a reported $10 million EBITDA loss, indicating financial challenges within the company's European operations. The decision to serve European customers from its US plants suggests a shift in operational focus, which may have contributed to the market's negative reaction.

This strategic shift is part of a broader effort to streamline operations and improve financial performance. The closure of the Moers facility is expected to have a significant impact on the company's financials, with the one-time impairment charge likely to affect earnings in the short term. However, the long-term benefits of this decision, including cost savings and improved operational efficiency, may outweigh the immediate financial impact. The market's reaction to this news highlights the sensitivity of investors to changes in the company's operational strategy and financial performance.