Why TMC The Metals Company Stock Skyrocketed 47.7% Last Month, but Is Slipping in July

Key Points

• June saw TMC The Metals Company stock reach its highest valuation level since 2021.

• TMC announced it had received $85.2 million in investment from Korea Zinc and made another significant financing move.

• The stock has seen a small sell-off in July, but its outlook remains promising.

• 10 stocks we like better than TMC The Metals Company ›

TMC The Metals Company (NASDAQ: TMC) stock soared in June's trading thanks to a bullish backdrop for the broader market and a major development for the business. The company's share price closed out last month's trading up 47.7%. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) rose 5% across the stretch, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 6.6%.

Thanks to easing geopolitical tensions and increasing hopes that the Federal Reserve will cut interest rates at its July meeting, the stock market enjoyed a strong rally in June that helped support big gains for TMC stock. The deep-sea mining specialist also announced some big financing moves that investors saw as strong bullish indicators.

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TMC stock rocketed on major financing news last month

TMC published a press release on June 16 announcing that it had entered into a new investment deal with Korea Zinc. In exchange for $85.2 million in cash, TMC sold 19.6 million shares of new company stock to Korea Zinc. As part of the deal, Korea Zinc also received three-year warrants to purchase an addition 6.9 million worth of common stock at a price of $7 per share.

At the time of the deal's announcement, the $7-per-share price to execute the warrants represented a substantial valuation premium -- but subsequent trading in June actually saw the stock surge above that level. Following news of the investment partnership with Korea Zinc, TMC also announced some significant refinancing news through a disclosure with the Securities and Exchange Commission (SEC).

In the June 18 SEC filing, TMC said that it waived a restriction on previously issued stock warrants that would have prevented the holders from moving through with a cashless exercise. The deal effectively allowed holders of its stock warrants to pay with the equivalent value in common stock in order to exercise the warrants, rather than paying in cash. As a result, the company expected that the move would lead to fewer shares of new common stock being issued through the warrants -- which means less dilution for shareholders.

Why has TMC stock fallen in July?

TMC stock has seen a small sell-off in July's trading, with the company's share price down roughly 2% in the month as of this writing. While there hasn't been any negative news for the company, the stock is taking a bit of a breather after reaching its highest valuation level since 2021 last month.

TMC's business performance outlook remains highly speculative, but there are signs that some key foundations are falling into place for the company. In April, President Trump signed an executive order to accelerate seabed mining projects. The order established a framework for the issuing of permits to be expedited, and TMC applied for its first commercial recovery permit shortly after the news. With the Trump administration making domestic mineral sourcing, the company could have opportunities to score some big wins.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.