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Why Are Sylvania Platinum Shares Falling Despite Share Buybacks?

Simon Mugo trader
Updated 5 Jul 2022

Trade Sylvania Platinum shares Your capital is at risk

Key points:

  • Sylvania Platinum shares are flailing despite recent share buybacks.
  • The buybacks failed to trigger a rally in SLP shares amid poor sentiment.
  • So, should you buy Sylvania Platinum shares? Read on to find out.

The Sylvania Platinum Ltd (LON: SLP) share price has fallen 14.4% in the past two days, shortly after the company paused its share buyback operations. The company produces platinum group metals (PGM) via the retreatment of PGM-bearing chrome tailing to recover PGMs.

The company’s dump operations include six chrome beneficiation and platinum group metals (PGM) processing plants located in the Bushveld Ingenious Complex (BIC) in South Africa. There were no negative releases from the company that could warrant a significant decline in its share price.

Also read: The Best Nickel And Nickel Mining Stocks To Buy.

Sylvania Platinum has been updating the markets about its share buyback operations since late May, which should have boosted its share price. Instead, the company’s shares fell in early to mid-June and traded sideways before its recent decline.

Interestingly, the 14.4% decline witnessed in the past two days is the same percentage by which Sylvania Platinum’s shares have fallen this year. So, why are the company’s shares falling despite its impressive performance last year and the high global demand for PGMs?

Since there seems to be no fundamental reason behind the decline, we have to look at the technicals for clues as to what could be behind the recent decline. First, we know that a price decline is usually driven by an influx of sell orders compared to buy orders.

As technical traders, we know that shareholders do not need a fundamental reason to sell their shares. However, such a move results in a flood of sell orders entering the market, triggering a downtrend. As a result, we can see that Sylvania Platinum shares have broken below a crucial support level at 85.34p and are approaching another one at 65.48p.

As technical traders, the current setup does not present a decent trade setup since the Sylvania Platinum share price is trading right in the middle of a wide range. However, a decline to the lower support zone could present an excellent trade opportunity, while a rally back above the 85.34p support turned resistance level could present another opportunity.

*This is not investment advice. Always do your due diligence before making investment decisions.

Sylvania Platinum share price.

Sylvania Platinum share price 05-07-2022
Source: IG

The Sylvania Platinum share price has fallen 14.4% in the past two days from Friday’s closing price of 87.50p to today’s low of 74.90p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading