It's been a rather crazy time for the Arafura Rare Earths Ltd (ASX: ARU) share price of late. Back at the start of November, Arafura shares were going for 30 cents each. But by New Year's Eve, Arafura shares were 47 cents each, up more than 56% from where they were just two months prior.
But let's talk about the past week. Arafura has been on a bit of a rollercoaster. Just last Thursday, we saw Arafura at 45 cents a share. But Friday saw an astonishing run-up for this company, with Arafuras share climbing more than 13%.
Yesterday, the company rose another 7.8% to hit a new 52-week high of 56 cents per share at one point. Not only was that a new 52-week high, but it was also the highest Arafura share price has been at in more than 10 years. So between 6 and 9 January, Arafura shares climbed more than 22%.
But by the end of today's trading session, this story added a new, and rather different, chapter. The Arafura share price crashed today, no way around it. The company opened at its new 52-week (and decade) high of 56 cents per share but quickly started falling. By the end of today's session, Arafura had closed down 9.09% at 50 cents a share.
So what on earth is going on here?
Why has the Arafura share price been on such a wild ride in 2023?
Well, the first thing to note is that there hasn't been any fresh news out of Arafura. However, the company did announce the results of its share purchase plan last week.
But since then, all we have gotten out of the company has been routine paperwork announcements, mostly concerning this share purchase plan. So we can probably rule this out in explaining the wild volatility we have seen with the company's shares.
It is worth mentioning that most companies in or around Arafura's wheelhouse also had pretty awful days today. Lynas Rare Earths Ltd (ASX: LYC) shares fell by a nasty 3.75%. And lithium shares like Core Lithium Ltd (ASX: CXO) and Pilbara Minerals Ltd (ASX: PLS) also fell, with Core Lithium copping a 5% slide.
So perhaps investors, after enjoying such a strong run over 2023 thus far, have chosen today to take their profits off the table en masse. It's rather unusual for an ASX share to gain 20% over just a couple of days. Investors know this, and it is conceivable that many decided to try and get out rather than see what the next week holds.
This might be the most likely explanation as to why the Arafura Rare Earths share price had such a clanger today. Even so, the company remains up more than 10% in 2023 so far as at today's closing share price.
