It was a mixed day for ASX shares and the All Ordinaries Index (ASX: XAO) this Tuesday. The All Ords spent time in both positive and negative territory today, eventually closing 0.14% higher. But let's talk about the Arafura Rare Earths Ltd (ASX: ARU) share price.
Arafura shares were on fire today. The rare earths explorer closed at 24 cents a share yesterday, but finished today at 25.5 cents a share, up 6.25%. Earlier in the session, Arafura climbed as high as 26.5 cents, which was a hefty 10.4% rise at the time.
So what on earth was going on with the Arafura Rare Earths share price today that might explain such a huge bump?
Image source: Getty Images
Why was the Arafura Rare Earths share price rocketing today?
Well, it's a bit of a mystery.
There hasn't been any fresh news or announcements out of Arafura itself for almost a week. And none that were marked as price sensitive since the quarterly cash flow update we saw back on 28 July.
There is one possible explanation we can consider though. It was only last week that the Arafura share price hit a new 52-week low of 23 cents. Since that low, Arafura has bounced around a fair bit, climbing up to 25 cents at the end of last week before dropping back down towards its 52-week low earlier this week.
Today's gain was another big bounce off of those lows. Perhaps investors have decided the Arafura share price is now worth a second look as it explores territory around this new low watermark.
Remember, this is a company that was going for as high as 70 cents a share back in March. Yep, Arafura shares are down more than 60% from that high, even after today's gains, as you can see below:
Another factor to consider here is the recent love showered over Arafura from one ASX broker. As we covered earlier this month, ASX broker Bell Potter is eyeing off Arafura shares at their current valuation.
The broker has a speculative buy rating on the rare earth producer, along with a 12-month share price target of 72 cents. If realised, that would see investors gain a whopping 180% from where the shares are today.
Thus, perhaps some ASX investors are taking note of this, and are buying into Arafura shares accordingly. Whatever the reason for today's strong showing, it will no doubt come as a relief for Arafura shareholders.
