As investors closely watch the stock market, the recent performance of United States Steel has raised eyebrows and concerns. Following a surge that saw an increase of more than 30% year-to-date, including a significant 25% rise over the past month, the stock’s trajectory has been closely linked to the implications of President Donald Trump’s tariff announcements. However, despite this rally, the underlying financials reveal a contrasting story.
In Q4 2024, United States Steel reported a net loss of $89 million, or $0.39 per diluted share. Adjusted for certain items, the net loss stood at $28 million, or $0.13 per diluted share. This situation becomes even more complex in light of Trump’s recent directive to reassess Nippon Steel’s proposed $15 billion acquisition of U.S. Steel. While this directive has reignited investor optimism, it is crucial to consider the broader economic context—one that has historically been unkind to the stock during downturns.
Amidst concerns of a potential slowdown, investors are left wondering how resilient United States Steel stocks will remain in the face of economic adversity. Historically, the stock has exhibited a concerning volatility during economic downturns. For instance, during the inflation crisis of 2022, the stock witnessed a staggering decline of 55.7%, dropping from a high of $38.45 on March 25 to $17.02 by July 5. This stark contrast reveals that even as the S&P 500 experienced a 25.4% peak-to-trough drop, United States Steel struggled to maintain its value.
Moreover, the Covid pandemic in 2020 further exemplified the stock’s volatility. The share price plummeted by 57.1%, from $11.41 at the start of the year to a low of $4.90 on March 18. However, like the inflation shock, this downturn was followed by a rebound, with the stock fully recovering its pre-pandemic high by November 23, 2020.
The most sobering reminder of the risks involved with United States Steel comes from the global financial crisis of 2008. During that period, the stock saw a catastrophic plummet of 91.2%, falling from a high of $191.96 on June 25, 2008, to just $16.88 by March 2, 2009. While the S&P 500 experienced a significant decline of 56.8%, United States Steel’s drop was even more pronounced, marking one of the most dramatic falls in its history.
Today’s market environment presents its own challenges, and the question remains: could a drop to under $5, like the history suggests, be on the horizon? Investors must draw comparisons between the company’s current fundamentals and its situation back in 2009. Back then, United States Steel boasted record net income of $2.13 billion, trading at about 2x earnings. In contrast, earnings over the past twelve months have hovered around $0.38 billion, yielding roughly 4% on a $10 billion market cap. With the current valuation multiples holding higher today, could we expect a similar collapse in stock prices? While a drop may not reach the same depths as in 2009, it remains an ever-present risk.
Given such volatility, it is crucial for investors to ask themselves whether they would continue to hold United States Steel stock if it dropped to $20, $10, or even lower. Holding onto a declining stock can be emotionally and financially taxing, especially when observing significant downturns. Trefis, in partnership with Empirical Asset Management—a Boston-based wealth manager, has developed allocation strategies that have yielded positive returns even during tumultuous periods, such as the 2008-09 crisis when the S&P 500 fell over 40%.
As economic uncertainty looms, investors must weigh their options. For those seeking growth with potentially lower volatility, diversifying into high-quality portfolios may provide a more stable investment avenue. Trefis has been focusing on providing market-beating portfolios that emphasize a rules-based approach to wealth management. With history as a guide, the landscape of United States Steel stocks forces investors to remain vigilant and informed as the economic climate continues to evolve.
image source from：https://www.forbes.com/sites/greatspeculations/2025/04/11/can-united-states-steel-stock-decline-to-5/
