Massey Energy stock sinks 10% after mine explosion
NEW YORK (CNNMoney.com) — Shares of Massey Energy plunged more than 8% Tuesday, one day after an explosion at one of the company’s coal mines in West Virginia killed at least 25 workers and left 4 missing.
The blast took place at the Upper Big Branch Mine, about 30 miles south of Charleston, during a shift change Monday afternoon.
Massey Energy stock was down 10% at 12:25 p.m. ET Tuesday. Still, the company’s shares are up almost 20% year-to-date. Massey’s headquarters are in Richmond.
The cause of the explosion, the deadliest U.S. mining disaster in 25 years, was unknown Tuesday.
Massey was previously fined for violations at the Upper Big Branch and other mines, said David Lipschitz, a senior analyst at Credit Agricole Securities.
“Massey has probably had more fines and other issues than its competitors,” Lipschitz said. “Of course, violations can be something like trash on the floor. I’m not excusing them, but coal is a tough industry.”
Lipschitz expects that the disaster will hurt only 2010 earnings. Even if the Upper Big Branch mine is shut down for nine months or a year following the accident, he doesn’t expect it to affect the bottom line in 2011 or 2012.
The stock should bounce back in the coming weeks, Lipschitz said, just as it did following a dip that occurred after a 2006 mine fire that killed two workers.
“The price will lag for a few days as people absorb the tragedy,” Lipschitz said, “but we’ll soon get back to focusing on strong market fundamentals.”