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- CLF 3Q25 - Cliff climbing. Bull case $22. Bear case $7
CLF 3Q25 - Cliff climbing. Bull case $22. Bear case $7
Cheat Sheets
CLEVELAND-CLIFFS (CLF)
🏭 U.S. Steel Leader | Q3 Loss -$0.45 (Beat) | EBITDA $143M (+52%) | Q4 Guided $300-350M
Auto Mix 30% ↑ | ASP $1,032 (+$17) | $300M Cost Cuts | Rare Earth Discovery | ArcelorMittal Contract Ends Dec
💰 Market Cap: $6.7B | 🏢 30k Employees | 🌐 #1 Flat-Rolled N. America
👨💼 CEO Lourenco Goncalves | 🎯 9 Auto Plants Ready | 🇺🇸 Cleveland, OH
$15.90
📈 +$2.59 (+19%) Today
+182% YTD | 55% in 2 Days
Price Targets (18 Months)
Current Price: $15.90
$22.00
Bull Case (+38%)
Everything Works
🚀 Needs:
Q4 delivers $300-350M • Auto boom continues • ArcelorMittal +$500M/yr • Tariffs stay • Rare earths hit • MOU closes
$18.00
Base Case (+13%)
Steady Recovery
⚖️ Needs:
Q4 hits $300M (low end) • Auto stabilizes • ArcelorMittal +$350M/yr • Cost saves deliver • No recession
$7.00
Bear Case (-56%)
Miss + Recession
⚠️ Risk:
Q4 disappoints • Auto recession • Tariffs rolled back • Guidance credibility shot
The TL;DR
💰 What Happened
• Q3 Loss: -$0.45 (beat -$0.47 estimate)
• EBITDA: $143M, up 52% from Q2
• Auto Mix: Jumped from 26% to 30%
• ASP: Up $17/ton to $1,032
• Q4 Guidance: $300-350M EBITDA (huge 110-145% jump!)
• Stock: Up 55% in 2 days on rare earth news
• EBITDA: $143M, up 52% from Q2
• Auto Mix: Jumped from 26% to 30%
• ASP: Up $17/ton to $1,032
• Q4 Guidance: $300-350M EBITDA (huge 110-145% jump!)
• Stock: Up 55% in 2 days on rare earth news
✅ Bull Case
• CEO locked 2-3 yr deals with ALL major auto OEMs
• 9 galvanizing plants ready NOW (competitors building for 2028)
• ArcelorMittal contract ends Dec = +$350-500M/yr
• $300M cost cuts fully implemented
• $425M asset sales + $400M DOD contract
• Tariffs staying (CEO: "not negotiating tools")
• Rare earths = free lottery ticket
• 9 galvanizing plants ready NOW (competitors building for 2028)
• ArcelorMittal contract ends Dec = +$350-500M/yr
• $300M cost cuts fully implemented
• $425M asset sales + $400M DOD contract
• Tariffs staying (CEO: "not negotiating tools")
• Rare earths = free lottery ticket
❌ Bear Case
• Still losing money (-$1B YTD 2025)
• Q4 guidance is HUGE ask (need 110% jump in 1 quarter)
• History: 6 quarters of missed promises
• Canadian business = 9% sales, zero profit
• Auto deals have outs if recession hits
• Rare earths = speculation, not proven
• Stock up 182% YTD, priced for perfection
• Q4 guidance is HUGE ask (need 110% jump in 1 quarter)
• History: 6 quarters of missed promises
• Canadian business = 9% sales, zero profit
• Auto deals have outs if recession hits
• Rare earths = speculation, not proven
• Stock up 182% YTD, priced for perfection
⚠️ Bottom Line
At $15.90 after 55% rally, you're betting on Q4 delivering $300M+. Hit = $20-22. Miss = $10-11. Q4 earnings (Jan 2026) is THE moment. High risk, high reward.
🚀 Bull Thesis
💎
Auto Deals Locked Through 2027-2028
CEO: "Locked 2-3 year agreements with ALL major auto OEMs at higher volumes and favorable pricing through 2027-2028."
Why: OEMs want to avoid tariffs by making cars in U.S.
Proof: Q3 auto mix jumped 26%→30%, driving $17/ton price increase
Edge: 9 galvanizing plants ready TODAY. Competitors won't have capacity until 2028-2029
Bonus: Major aluminum mill fire = OEMs switching BACK to steel
Why: OEMs want to avoid tariffs by making cars in U.S.
Proof: Q3 auto mix jumped 26%→30%, driving $17/ton price increase
Edge: 9 galvanizing plants ready TODAY. Competitors won't have capacity until 2028-2029
Bonus: Major aluminum mill fire = OEMs switching BACK to steel
⚡
ArcelorMittal = $500M EBITDA Boost
What: Legacy contract forcing CLF to sell commodity slabs at terrible margins to ArcelorMittal
When: Contract ends early December 2025
Impact: Redirect those tons to high-margin auto steel = +$350-500M annual EBITDA
Math: This ALONE takes CLF from -$200M to +$175-300M run-rate
Certainty: 100%. It's contractual and happening
When: Contract ends early December 2025
Impact: Redirect those tons to high-margin auto steel = +$350-500M annual EBITDA
Math: This ALONE takes CLF from -$200M to +$175-300M run-rate
Certainty: 100%. It's contractual and happening
👑
$700M Cash Coming
Cost Cuts: $300M/year (fully implemented Q3)
Asset Sales: $425M from 8 sites under contract
DOD Contract: $400M over 5 years ($80M/yr)
Use: All going to debt reduction
Result: $700M+ contractual cash generation
Asset Sales: $425M from 8 sites under contract
DOD Contract: $400M over 5 years ($80M/yr)
Use: All going to debt reduction
Result: $700M+ contractual cash generation
🚀
Tariffs + MOU + Rare Earths
Tariffs: CEO says "here to stay, not negotiating tools." National security priority
MOU: Major global steelmaker wants to partner. Announcement "next few months." Could be JV/partnership/takeover = $3-7/share
Rare Earths: Found "evidence of mineralization" at 2 sites. IF proven = $5-10/share. Low odds but free option
MOU: Major global steelmaker wants to partner. Announcement "next few months." Could be JV/partnership/takeover = $3-7/share
Rare Earths: Found "evidence of mineralization" at 2 sites. IF proven = $5-10/share. Low odds but free option
🐻 Bear Thesis
📉
Q4 Guidance Too Aggressive
Guidance: $300-350M EBITDA Q4
Jump: That's 110-145% increase from Q3's $143M in ONE quarter
If Miss: Delivers $250M instead = stock crashes 30-40%
History: 6 straight quarters of "profitability next Q" promises that disappointed
Risk: Stock at $15.90 priced for perfection
Jump: That's 110-145% increase from Q3's $143M in ONE quarter
If Miss: Delivers $250M instead = stock crashes 30-40%
History: 6 straight quarters of "profitability next Q" promises that disappointed
Risk: Stock at $15.90 priced for perfection
🏭
Canadian Disaster
Problem: Stelco = 9% of sales ($420M/quarter), generates ZERO profit
Why: Import penetration 65% in Canada, government won't act
CEO Admitted: "Picture in Canada remains disappointing" and "I confess my inability to convince Canadian officials"
Impact: Structural drag, not getting fixed
Why: Import penetration 65% in Canada, government won't act
CEO Admitted: "Picture in Canada remains disappointing" and "I confess my inability to convince Canadian officials"
Impact: Structural drag, not getting fixed
💸
Recession Risk Not Priced
Reality: Auto "contracts" are supply agreements with force majeure outs
Risk: If recession hits, vehicle sales drop 14M → OEMs invoke outs
Current: Avg vehicle $48k, payment $734, rates 6-7%. Consumer leverage maxed
Result: CLF forced to sell commodity steel at bad margins
Stock: Up 182% YTD betting on zero recession = dangerous
Risk: If recession hits, vehicle sales drop 14M → OEMs invoke outs
Current: Avg vehicle $48k, payment $734, rates 6-7%. Consumer leverage maxed
Result: CLF forced to sell commodity steel at bad margins
Stock: Up 182% YTD betting on zero recession = dangerous
⚠️
Rare Earth Hype
Truth: Found "evidence" NOT proven reserves
Reality: Zero assays, zero mining plan, years away IF viable
Odds: <1% of exploration projects become mines
Stock Impact: Added $2.5B market cap ($5/share) on speculation
Warning: When no updates for 6-12 months, premium evaporates
Reality: Zero assays, zero mining plan, years away IF viable
Odds: <1% of exploration projects become mines
Stock Impact: Added $2.5B market cap ($5/share) on speculation
Warning: When no updates for 6-12 months, premium evaporates
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
