Over the last month, Cleveland-Cliffs (NYSE:CLF) has experienced a decrease of approximately 25% in its share price, a significant decline for a company that had been benefiting from positive trade-policy news and expectations of a revival in automotive-steel demand.
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Reasons for the Decline
A combination of several company-specific challenges and broader economic headwinds has led to the drop in CLF’s stock:
- Revenue & margin pressures. In Q3 2025, Cleveland-Cliffs reported revenues of approximately US$4.7 billion, down from US$4.9 billion in Q2 of the same year. The adjusted net loss was US$ 223 million, or US$ 0.45 per diluted share. While the adjusted EBITDA rose to US$ 143 million from US$ 94 million in the previous quarter, it is worth noting that the company remains in a loss position and revenues have slightly decreased quarter-over-quarter.
- Weak selling price & product mix challenges. Within the steel-making division, the average net selling price per ton was US$ 1,032 in Q3, a minor decline from US$ 1,045 a year prior. Although shipment volumes increased to 4.0 million net tons from 3.84 million a year earlier, cost pressures persisted, and the margins remained slim (cash margin of US$205 million for Q3 compared to US$110 million a year ago) in a difficult market.
- External demand & macroeconomic risks. The steel industry as a whole is experiencing cyclical demand challenges (construction, manufacturing, automotive) and facing competition from imports.
- Discrepancy between strategic vision and execution. Although CLF has introduced strategic initiatives (such as evaluating rare-earth mineralization at sites in Michigan & Minnesota and forming a memorandum of understanding with a global steel producer), investors seem hesitant until more tangible outcomes are realized. When a company continues to operate at a loss and offers cautious guidance, its growth narrative may lose traction.
These elements have all played a role in the 25% decline of the stock — indicative of a reassessment of risks rather than just opportunities. For further insights, see, Would You Still Hold Cleveland-Cliffs Stock If It Fell Another 30%?
Future Outlook
Moving forward, several critical themes and metrics will determine whether the stock stabilizes, recovers, or continues its downward trend.
- Implementation of strategic initiatives: CLF is assessing the potential for rare-earth minerals at mining locations in Michigan and Minnesota. Additionally, they hold a memorandum of understanding with a significant global steel producer, which could expedite growth if finalized as a binding agreement. The success of these initiatives is crucial for maintaining investor confidence.
- Margins & recovery in steel demand: Approximately 30% of the steel-making revenues in Q3 stemmed from the automotive sector (? US$1.4 billion of the steel segment), making automotive recovery a significant factor. Nonetheless, CLF must demonstrate consistent improvements in margins, reduce costs, and stabilize pricing. Their cost reduction targets (for example, aiming for ~US$50/ton unit cost savings compared to 2024) are important indicators to monitor.
Financial stability & liquidity management: CLF concluded Q3 2025 with around US$ 3.1 billion in consolidated liquidity. While this provides some safety, ongoing losses and the cyclical nature of steel production raise the possibility of investor apprehensions regarding capital dilution, debt issues, or margin declines. - Valuation & risk-reward dynamics: Given the decline in stock price, some level of risk may already be accounted for. However, positive developments — such as a confirmed deal, evidence of rare-earth feasibility, or stronger-than-anticipated steel demand — will be critical for generating upside. Conversely, ongoing stagnant or negative performance could result in further declines.
Conclusion
The 25% decline in CLF’s stock over the previous month indicates that the market is transitioning from optimistic projections to a focus on execution. The company has intriguing strategic goals, but the immediate challenge is demonstrating that this vision can lead to enhanced earnings, improved margins, and positive cash flow. Currently, we value CLF stock at $11, aligning with the prevailing market price.
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