Sibanye Stillwater’s shares (JSE: SSW) have encountered a 16% year-to-date decline, reflecting challenges posed by falling commodity prices, particularly in gold and platinum. The primary driver of Sibanye’s woes is the sharp decline in platinum prices, down 7.51% year-to-date. As a major platinum producer, this significantly impacts the company’s bottom line. Additionally, concerns surrounding a tighter-for-longer monetary policy in the US further dampen gold prices, adding pressure to Sibanye’s revenue stream.
Despite the price plunge, Sibanye remains financially robust. The company boasts a low price-to-earnings ratio (4.3x) compared to the South African market average, suggesting potential undervaluation. Additionally, it offers a healthy 5.04% dividend, although its sustainability remains a question due to cash flow concerns.
Also, the recent appointment of a Chief Sustainability Officer highlights Sibanye’s commitment to ESG practices, potentially attracting long-term investors seeking responsible companies. However, ongoing wage negotiations with South African unions cast a shadow of uncertainty, potentially leading to increased costs and impacting future profits.
Technical
The 1-day chart reveals Sibanye Stillwater’s price action hovering around the 61.80% Fibonacci retracement level (2,087 cents) following recent declines. Moving averages offer mixed signals. The price action trades below the downward-sloping 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line), suggesting short-term bearish pressure. However, the RSI (36.29) indicates potential for a rebound, making a break above the 61.80% Fibonacci retracement level crucial.
With the price action trading around the golden ratio, a move in either direction away from the ratio could offer short-term trading opportunities. Therefore, a push above would leave the 50.00% Fibonacci retracement level as the next significant hurdle for the charge higher. A break above the 50.00% Fibonacci retracement level would bring the 23.60% Fibonacci retracement level (2,450 cents) and 2,665 cents resistance level firmly into play.
Conversely, a break below the golden ratio would leave the 78.60% Fibonacci retracement level (1,951 cents) and 1,756 cents price levels as the next levels of significance in the short term.
Summary
Sibanye Stillwater’s share price, at 2,087 cents, reflects a volatile market influenced by both positive and negative factors. A sustained push above the 61.80% Fibonacci retracement level could pave the way for a climb towards the 50.00% level (2,259 cents) and beyond. Conversely, a break below the golden ratio could expose the 78.60% Fibonacci retracement level (1,951 cents) and further downside risks.
Sources: TradingView, Trading Economics, Reuters, Investor Observer, Nasdaq, Simply Wall Street.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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