Krakatoa share price sinks 9% following Tuesday's surge

After a gangbuster day of trading on Tuesday, shares in the precious metals explorer are on the slide today.

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Key points

  • The Krakatoa share price is sliding today, slipping nearly 9% to trade at 10.5 cents
  • The tumble follows its near-95% gain, recorded yesterday
  • The surge followed news of a rare earth elements discovery at one of the company's Western Australian projects

The Krakatoa Resources Ltd (ASX: KTA) share price is back in the red today following yesterday's 94.92% surge.

At the time of writing, the Krakatoa share price is 10.5 cents, 8.7% lower than its previous close.

For context, the broader market is in the green on Wednesday. Right now, the All Ordinaries Index (ASX: XAO) has gained 0.28% while the S&P/ASX 200 Index (ASX: XJO) is up 0.19%.

Let's take a closer look at what's been going on with the precious metals explorer's stock lately.

What's weighing on Krakatoa shares today?

The Krakatoa share price is trading in the red on Wednesday despite no news being released by the company.

It's possible the slip could be due to investors cashing in at a higher price, spurred by yesterday's whopping gain.

That lift was inspired by a major ionic rare earth elements discovery at the company's Mt Clere Project.

Drilling at the project's Tower Prospects found thick intersections of clay hosting the elements.

For those unaware, rare earth elements are essential for all sorts of technology, including gadgets, cameras, machinery, and lights.

Krakatoa CEO Mark Major also pointed out that demand for rare earth elements was expected to take off over the coming decade. Major said:

We are now in a strong position to capitalise on this potential as we have only covered a six square kilometre area, mineralisation is open, thick, and close to surface.

Significantly, we have multiple other high priority targets within the extensive 2,300 square kilometre property.

About the Krakatoa share price

While today's drop is likely to be disappointing for some, the Krakatoa Resources share price is still in a pretty good position.

Right now, it's 19% lower than its 52-week high, reached in intraday trade yesterday. Comparatively, it's trading for 162.5% more than its 52-week low of 4 cents.

It's also trading 114% higher right now than it was at the start of 2022.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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