Why Are Lithium Stocks PLL, LTHM, ALB Down Today?

  • Lithium stocks are getting hit hard today on a couple of key catalysts.
  • Goldman Sachs has released a report highlighting what it believes could be a case for peak lithium.
  • Argentina is putting a floor under lithium prices.
lithium (LI) on the periodic table
Source: Shutterstock

Certain pockets of the market are performing better than others today. Lithium stocks in particular are among the worst-performing groups.

Right now, a range of lithium producers — including Piedmont Lithium (NASDAQ:PLL), Livent (NYSE:LTHM) and Abermarle (NYSE:ALB) — are all down between 7% and 15%. These moves outpace the broader market’s price action and come amid two key catalysts.

The first catalyst that investors are pricing in today is a report from Goldman Sachs. The report highlights a bear thesis on lithium, suggesting the peak may be in for this key mineral used in battery production.

On top of this, Argentina has reportedly set a reference price of $53 per kilogram for its lithium exports. Argentina happens to be a major exporter of the mineral. It is setting the reference price in order to “prevent the under-quoting of exports and enhance transparency.”

Let’s dive into what this means for investors looking at lithium stocks.

Is the Bull Market for Lithium Stocks Over?

Goldman Sachs seems to think the bull market is over for lithium.

Indeed, the firm’s report is something lithium investors certainly didn’t want to see. We all know that, at some point, inflation will subside; the trajectory of global monetary policy says as much. However, with demand destruction comes less materials needed, including lithium. Whether we’re at “peak lithium” or not is up for debate, but the report has raised eyebrows today regardless.

That said, Argentina’s move to effectively put a floor under lithium prices ought to be good for producers. The move doesn’t seem nearly as bearish. That is, unless investors believe it implies the country was underreporting numbers and therefore inflating the demand picture for lithium.

Today, that belief appears to be the case. Investors are currently less bullish on the outlook for lithium and lithium stocks.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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