Investors of Li-Cycle (NYSE:LICY) can celebrate some good news today — but there’s a catch. LICY stock is moving higher because Li-Cycle expects to receive a loan from the Energy Department’s Loan Programs Office. However, it’s a conditional commitment, and it will probably take a while for Li-Cycle to receive the funds.
Li-Cycle is a battery recycling company. The Loan Programs Office, according to the Wall Street Journal, offered a conditional commitment for a loan to Li-Cycle, valued at $375 million.
The funding is intended for a Li-Cycle recycling facility located in New York. Reportedly, Li-Cycle stated the facility “can help supply key materials like lithium by reusing the metals from discarded batteries.”
Due to the funding earmarked by the Inflation Reduction Act, the Loan Programs Office can offer financial support to climate-related projects like this. With this in mind, let’s take a look at the trading community’s response to the news surrounding Li-Cycle today.
What’s Happening with LICY Stock?
As of 10:30 a.m. Eastern, LICY stock was up around 10% and holding the $6 level. Clearly, Li-Cycle’s shareholders are pleased with the news of the government-funded support.
However, as always, traders should read the fine print. Remember, the Journal reported the commitment for the funding to Li-Cycle is “conditional.” So, the are no guarantees here.
Furthermore, not only will Li-Cycle “have to meet certain conditions before actually receiving the funding,” but this process can take more than a year. In other words, don’t count on Li-Cycle receiving $375 million anytime soon.
Still, the markets can be very forward-looking and optimistic. Hence, it appears LICY stock investors are pushing the share price higher in anticipation of a best-case scenario.
It will take a while before the market finds out whether Li-Cycle actually receives any or all of the $375 million. Until then, stay tuned for further developments about this intriguing battery recycling startup.
On the date of publication, David Moadel did not have (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.