July 2 (Reuters) - Shares of rare earth miner Molycorp Inc dropped nearly 9 percent on Wednesday after commentary website Seeking Alpha posted a blog post by an investor who said he has shorted the stock.
A writer identified as "New York Shock Exchange" said Molycorp is worth only $1.60 a share. The company's shares fell 23 cents to $2.34.
The stock has been weighed down by concerns about how quickly it is burning through its cash, and the possibility it may need to tap the market for more funds, either through debt or equity, as it ramps up an expansion in California that has jacked up its debt levels.
Through a website linked to the Seeking Alpha account, Reuters emailed New York-based writer Ralph Baker, who called back and said he wrote the post. Baker said he has a short options position worth a few thousand dollars and has worked in the mergers and acquisitions sector. A short position makes money if a stock falls.
Baker said that since 2008 he has been writing and running a youth program that teaches basketball and investment skills. He posts regularly at Seeking Alpha.
"I've written several articles on Molycorp, and never moved the stock," he said. "I just put it all in one place, so people can connect the dots."
Baker's article summarized the company's recent losses, quotes from a credit downgrade, and argued it may need to write down goodwill when it next reports earnings.
Luisa Moreno, an analyst at Euro Pacific Canada, said the Seeking Alpha blog post was the only development she was aware of Wednesday morning, and noted the uncertainty around Molycorp's future financing.
"We're not sure whether it's going to be debt or equity. If they raise significant amounts of equity, where the stock is right now, that could lead to major dilution, potentially," she said.
But Moreno said she thinks the company has a few months before it will need cash.
A Molycorp spokesman said the company does not comment on moves in its share price.
Prices of rare earth metals, an essential part of high-tech goods from smartphones to hybrid cars, have dropped since early 2011 after China, the world's main producer, eased export controls.
In the first quarter, Molycorp's posted negative cash flow of $45.8 million. It had $236.1 million in cash and equivalents at March 31. (Reporting by Allison Martell; Editing by Jeffreys Hodgson and Benkoe)