TMC Stock Down 42% Amid Regulatory Speculation, DeepValue Highlights Persistent Risks

What happened

TMC's stock has fallen 42% from its recent high, sparking debate on its buyability amidst new regulatory developments. A Motley Fool article notes potential expedited deep-sea mineral extraction permitting under President Trump, which could benefit TMC's nodule mining ambitions. However, the latest DeepValue report underscores TMC as a pre-revenue company with binary risks hinging on ISA permitting and technology scale-up, citing substantial losses and negative free cash flow. Despite regulatory tailwinds, the company lacks revenue guidance and faces environmental and operational uncertainties that remain unresolved. Thus, the stock decline reflects ongoing speculative pressures, with the investment case still dominated by high-stakes regulatory and execution outcomes.

Implication

The regulatory changes may offer a potential pathway for faster U.S. permitting, but TMC's commercialization still requires ISA approval for international operations, which remains pending with uncertain timelines. The company's cash balance of $115.8 million against liabilities of $91.8 million provides a limited runway amid ongoing losses, necessitating close monitoring of liquidity and potential dilutive financing. Key risks include ISA exploitation regulations, environmental performance of collection systems, and scalability challenges, all highlighted in the DeepValue report as critical watch items. Until these binary outcomes are resolved, TMC's valuation acts as an option on regulatory and technical success, with high downside risk from adverse decisions or failures. Therefore, any investment should be approached with extreme caution, emphasizing patience and risk management over speculative bets on regulatory shifts.

Thesis delta

The new regulatory environment introduces a potential tailwind for expedited U.S. permitting, which could provide an alternative pathway if ISA approvals stall. However, the core thesis of waiting for ISA rulemaking and technology validation remains unchanged, as these are the primary gating factors for TMC's commercialization and revenue generation. No material shift in the 'WAIT' recommendation is justified until clearer progress on permitting or operational milestones is demonstrated.