What’s Happening With Alcoa Stock?

AA: Alcoa logo

Alcoa (NYSE:AA) stock has declined by almost 22% over the past month (about 21 trading days) considerably underperforming the broader S&P 500 which remains down by about 9% over the same period. The big sell-off comes as aluminum prices face pressure, falling from a high of about $3,700 per metric ton in early March 2022 and $2,850 in January, to just about $2,250 currently, as a steady increase in interest rates by Central banks are expected to impact global growth and demand for industrial commodities. U.S. GDP has also contracted over the last two consecutive quarters, while data from the Chinese industrial and property sectors also hasn’t been encouraging, clouding the outlook for aluminum demand. In addition to lower commodity prices, Alcoa is also contending with rising energy prices and higher input costs, which could hurt its profitability.

Given that AA stock is down 22% over the last month, will it continue its downward trajectory, or is a recovery imminent? Going by historical performance, there is a roughly equal chance of a rise or a decline in AA stock over the next monthOut of 82 instances in the last six years that AA stock saw a twenty-one-day decline of 22% or more, 44 of them resulted in AA stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 44 out of 82, or a 54% chance of a rise in AA  stock over the coming month. See our analysis on Alcoa Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last six years’ data

  • After moving 12% or more over a five-day period, the stock rose in the next five days on 53% of the occasions.
  • After moving -17% or more over a ten-day period, the stock rose in the next ten days on 47% of the occasions.
  • After moving -22% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 54% of the occasions.
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  6. Falling Aluminum Prices Will Weigh On Alcoa’s Q3 Results

This pattern suggests that there is not a very high chance of a rise in AA stock in the near-term.

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 Returns Sep 2022
MTD [1]
YTD [1]
Total [2]
 AA Return -20% -34% 40%
 S&P 500 Return -4% -20% 69%
 Trefis Multi-Strategy Portfolio -6% -21% 213%

[1] Month-to-date and year-to-date as of 9/22/2022
[2] Cumulative total returns since the end of 2016

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