Whitehaven Coal shareholders might want to look away now

Whitehaven Coal Limited (ASX: WHC) has seen its share price sink 7.7% in trading today to 60 cents.

Still, shares are up more than 50% since hitting a low of 36 cents in February. But over the longer-term, shareholders have seen a massive loss, with the share price down 53% in the past year, and more than 90% in the past 5 years.

Whitehaven Coal share price Apri 2016

Source: Yahoo Finance


That’s all got to do with coal prices. Whitehaven produces coal both for use in steelmaking as well as energy coal. And both have plummeted, with thermal (energy) coal down lore than 50% in the past five years as the following chart shows.

Monthly Coal price Apr 2016

Source: IndexMundi

Coal miners around the world appear to be acknowledging the threat from renewable energy, not to mention the decline in electricity power usage. (Could the rise of household energy storage batteries and electric cars change that?)

Foolish takeaway

In the last half, Whitehaven produced a net profit of $7.8 million despite the plunging coal prices. If coal prices can rise, Whitehaven’s share price could rocket, but I’m won’t be putting my house on it.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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