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Cleveland-Cliffs Jumps on Support From Meme Stock Traders

Shares of steelmaker Cleveland-Cliffs jumped more than 14% on nearly four times their normal daily trading volume on Wednesday.
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Shares of Cleveland-Cliffs Inc.  (CLF) - Get Cleveland-Cliffs Inc. Report jumped more than 14% on Wednesday as the steelmaker was swept up in the meme-stock craze that has roiled markets in recent months. 

Cleveland-Cliffs shares experienced more than four times their normal trading volume, rising 14.6% to $23.22 on Wednesday. Trading in the company's call options was five times the average, according to Bloomberg. 

A forum on Reddit channel WallStreetBets claims the company is being shorted and that it is undervalued at a time when steel prices are rising and there are long wait times for big steel orders due to shortages. 

The price of steel has jumped in recent months, trading at nearly triple its 20-year average. 

Read More: Why Jim Cramer Likes Cleveland-Cliffs Amid Inflation Worries

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In April, the company swung to a first quarter profit after reporting a tenfold increase in revenue. 

Cleveland-Cliffs earned $41 million, or 7 cents a share, in the quarter compared with a loss of $52 million, or 18 cents a share, in the year-ago period. Revenue reached $4.05 billion from $359 million a year earlier.

“Q1 was just the first full quarter for Cleveland-Cliffs as a fully transformed business, and we have already accomplished a lot," Chairman, President and Chief Executive Lourenco Goncalves said in a statement at the time.

Steel Shares Fired Up as Cleveland-Cliffs Expects Strong Earnings

The company also raised a profitability metric for 2021 based on better-than-expected contract renewals, as well as the assumption that the U.S. hot-rolled-coil index price will average $1,100 per net ton for the last nine months of the year.