TMC the Metals Plunges 10.8%—Is This the Start of a Deep Correction?

Summary
• TMC the metals company Inc. (NASDAQ:TMC) tumbles 10.8% intraday, trading at $4.8265 as of 14:55 ET
• Q2 earnings miss reveals $0.20/share loss vs. $0.05 estimate, with $33M non-recurring warrant charge
• Bollinger Bands show price near 4.28 support level, RSI at 16.09 (oversold territory)

Today’s selloff in TMC reflects a perfect storm of earnings disappointment and technical exhaustion. The stock’s 10.8% drop—its largest intraday decline since 2023—has pushed it closer to critical support levels. With the 52-week low at $0.721 still distant, traders are scrambling to assess whether this is a short-term panic or a structural shift in sentiment.

Earnings Miss and Warrant Charge Trigger Panic
TMC’s 10.8% collapse stems directly from its Q2 earnings report, which revealed a $0.20/share loss versus a $0.05 estimate. The $33 million non-recurring charge for warrants issued to Nauru—a one-time hit—exacerbated concerns about capital efficiency. While the company highlighted a $23.6 billion NPV milestone, the market fixated on the widening net loss compared to last year and the 5.9% post-earnings drop. Short sellers capitalized on the oversold RSI (16.09) and bearish MACD (-0.33) to accelerate the decline.

Metals Sector Mixed as BHP Gains 1.07%
While TMC’s collapse is idiosyncratic, the broader metals sector shows divergence. BHP Group (BHP) rose 1.07% on stronger-than-expected copper margins, while Antofagasta’s 11% output increase also buoyed sentiment. However, TMC’s deep-sea mining focus isolates it from traditional base metals plays. The sector’s $23.6 billion NPV milestone for TMC contrasts with peers’ near-term production gains, highlighting structural risks in speculative deep-sea projects.

Bearish Setup: Put Options and Short ETFs in Focus
• 200-day MA: 2.947 (far below current price)
• RSI: 16.09 (oversold)
• MACD: -0.33 (bearish divergence)
• Bollinger Bands: 4.28 (lower band) near critical support

The technicals scream short-term bearishness. Key levels to watch: 4.28 (lower Bollinger Band) and 4.75 (intraday low). While the 52-week low at $0.721 is distant, the RSI’s oversold reading suggests a potential rebound. However, the MACD’s negative histogram and -0.33 value indicate momentum is still bearish. No leveraged ETF data is available, but sector ETFs like XLB could offer directional exposure.

Top Put Option: TMC20250822P5
• Code: TMC20250822P5
• Type: Put
• Strike: $5.00
• Expiry: 2025-08-22
• IV: 109.23% (high volatility)
• LVR: 10.84% (moderate leverage)
• Delta: -0.581 (mid-range sensitivity)
• Theta: -0.0016 (slow time decay)
• Gamma: 0.506 (high sensitivity to price moves)
• Turnover: $18,610 (liquid)

This put option offers high gamma and moderate leverage, ideal for a 5% downside scenario. A 5% drop to $4.585 would yield a $0.1735 payoff (strike price $5.00 - projected price $4.585).

Top Call Option: TMC20250822C5
• Code: TMC20250822C5
• Type: Call
• Strike: $5.00
• Expiry: 2025-08-22
• IV: 121.98% (high volatility)
• LVR: 19.08% (high leverage)
• Delta: 0.434 (mid-range sensitivity)
• Theta: -0.0310 (rapid time decay)
• Gamma: 0.457 (high sensitivity to price moves)
• Turnover: $6,180 (liquid)

This call’s high leverage and gamma make it a speculative play if TMC rebounds. However, the -0.0310 theta means time decay is aggressive. Aggressive bulls may consider TMC20250822C5 into a bounce above $5.00.

Backtest TMC the metals Stock Performance
The backtest of TMC's performance after an intraday plunge of -11% shows favorable short-to-medium-term gains. The 3-Day win rate is 48.47%, the 10-Day win rate is 48.88%, and the 30-Day win rate is 49.69%. This indicates that following the intraday plunge, TMC tends to rebound over the short and medium term. The maximum return during the backtest period was 17.22%, which occurred on day 59, further suggesting that a rebound is likely following the initial dip.

Act Now: Short-Term Bearish, Watch 4.28 Support
TMC’s 10.8% drop has created a high-risk, high-reward scenario. While the RSI’s oversold reading and Bollinger Band proximity suggest a potential rebound, the MACD’s bearish divergence and -0.33 value indicate momentum remains downward. Traders should monitor the 4.28 support level and the 4.75 intraday low. For directional bets, the TMC20250822P5 put offers a calculated risk-reward profile. Meanwhile, sector leader BHP’s 1.07% gain underscores the divergence between TMC’s speculative deep-sea play and traditional metals stocks. Watch for a breakdown below 4.28 or a reversal above 5.00 to dictate next steps.