Newmont's 6.4% Plunge: Earnings Triumph or Market Rejection?

Summary
• Newmont (NEM) slumps 6.4% intraday to $78.05, despite Q3 adjusted EPS of $1.71 and $1.6B free cash flow.
• Moody's upgrades credit rating to A3, debt retired by $2B, and $823M returned to shareholders.
• Gold prices hit record highs, yet NEM underperforms sector peers like Anglogold Ashanti (-7.36%).
• Technicals show short-term bearish momentum but long-term bullish bias amid $98.58 52W high.

Newmont’s sharp intraday decline defies its robust Q3 earnings and balance sheet strength. While the company reported record cash flow and a near-zero debt position, the stock’s 6.4% drop—trading below $78—reflects investor skepticism over production challenges and cost pressures. The move coincides with a broader gold sector selloff, as geopolitical uncertainty and inflationary pressures test market confidence.

Earnings Optimism Clashes with Production Headwinds
Newmont’s Q3 earnings report highlighted $1.6B in free cash flow and a $2B debt reduction, yet the stock plunged as investors focused on near-term risks. The company warned of 2026 production declines due to mine sequencing at Penasquito and Cadia, while higher gold prices have inflated profit-sharing costs and royalties. Additionally, the absence of a permanent CFO and uncertainty around long-term projects like Red Chris cast doubt on capital allocation discipline. These factors overshadowed the $4.5B annual cash flow milestone and $0.25/share dividend, triggering profit-taking and short-covering in a volatile session.

Gold Sector Volatility as AU Slides 7.36%
The gold sector faces a crossroads as Newmont’s 6.4% drop mirrors Anglogold Ashanti’s 7.36% decline. While gold prices hit $4,000/oz, miners struggle with margin compression from rising input costs and production taxes. Newmont’s 11.04 P/E ratio, below the sector average, suggests undervaluation, but its 52W low of $36.86 and 52W high of $98.58 indicate a volatile trajectory. The sector’s mixed performance reflects divergent strategies: Newmont’s focus on shareholder returns contrasts with peers prioritizing exploration and expansion.

Bearish Plays and Gamma-Driven Puts in a Volatile Session
• 200-day MA: $59.25 (below) | RSI: 44.61 (neutral) | MACD: 2.04 (bearish divergence) | Bollinger Bands: $80.65–$95.89
• Short-term bearish momentum clashes with long-term bullish bias. Key support at $80.65 (lower Bollinger) and resistance at $88.27 (middle MA).
• Top Put: NEM20251031P75 (strike $75, expiry 10/31) – IV 51.45%, leverage 116.64%, delta -0.2358, gamma 0.0654, turnover $8,917. High gamma ensures sensitivity to price drops; moderate delta balances risk.
• Top Put: NEM20251031P76 (strike $76, expiry 10/31) – IV 51.40%, leverage 81.41%, delta -0.3084, gamma 0.0749, turnover $14,157. Strong theta (-0.0229) and gamma (0.0749) make it ideal for a 5% downside scenario.
• Payoff Estimation: At 5% downside (ST = $74.15), NEM20251031P75 yields $0.85/share (75–74.15), while NEM20251031P76 yields $1.85/share (76–74.15).
• Aggressive bears should target NEM20251031P75 into a breakdown below $80.65. If $75 breaks, NEM20251031P76 offers deeper downside capture.

Backtest Newmont Stock Performance
It looks like the automatic data-retrieval interface had an unexpected internal error while I was trying to pull Newmont’s daily price series. To move the back-test forward, we have two practical options:1. Retry the data download with a simpler request (e.g., daily OHLC prices only) and then detect every day when NEM’s low price fell ≥ 6 % below the previous close (a textbook definition of a −6 % intraday plunge). 2. If you already have (or can provide) a list of the dates when such plunges occurred, we can skip the download step and go straight to the event back-test.Please let me know which path you prefer (or if you’d like to adjust the plunge definition, e.g., based on close-to-close moves instead of intraday lows). Once I have either the raw price data or the event date list, I can complete the analysis and deliver the results.

Short-Term Volatility, Long-Term Conviction: What to Watch Now
Newmont’s 6.4% drop reflects near-term production risks and cost pressures, but its long-term fundamentals remain intact. The stock’s 52W high of $98.58 and 11.04 P/E ratio suggest undervaluation, though support at $80.65 and $75 must hold to avoid a deeper correction. Investors should monitor the $88.27 30D MA for a potential rebound and watch sector leader Anglogold Ashanti (AU), which fell 7.36%, for broader sentiment cues. For directional bets, NEM20251031P75 and NEM20251031P76 offer high-gamma exposure to a 5% downside scenario. Aggressive bulls may consider a bounce above $88.27, but caution is warranted until production guidance and leadership clarity emerge.