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Why Is Atlas Lithium (ATLX) Stock Up 35% Today?

  • Atlas Lithium (ATLX) stock is up more than 35% today.
  • This move comes as Tesla (TSLA) reportedly begins to assess acquisition deals in the lithium mining space.
  • Sigma Lithium (SGML) has been identified as the likely target, but the market seems to think Atlas is a better fit.
lithium (LI) on the periodic table
Source: Shutterstock

Lithium stocks are clearly in focus today, but one absolutely skyrocketing right now is Atlas Lithium (NASDAQ:ATLX). Currently, ATLX stock is up more than 35%, surging on some pretty high-profile news.

As InvestorPlace contributor William White reports, Sigma Lithium (NASDAQ:SGML) is rising today due to a potential sale to Tesla (NASDAQ:TSLA). With SGML stock up about 20% at the time of this writing, though, one might wonder why ATLX stock is up even more.

Well, it appears that investors don’t fully believe the rumors. More specifically, Sigma could be an acquisition target for Tesla CEO Elon Musk. But Atlas Lithium — a smaller and relatively more attractive option based on valuation — may be an even better pick in this environment. At least, that’s what speculators are clearly betting on right now.

Given the fact that we’re currently in the rumor stage of anything actually taking place, there’s a lot to unpack here. Let’s dive into what investors may want to make of this potential deal.

ATLX Stock Surges on Potential Takeover Deal

Tesla’s long-term demand for lithium is likely to be massive. Thus, a potential deal to acquire a lithium miner and vertically integrate seems to make sense.

Other Chinese producers have already done this. So, there’s obviously precedent for something similar to take place in the Americas. Accordingly — whether it’s Sigma, Atlas or even another company in the lithium space — investors appear to believe that some sort of deal will likely get done at some point, making right now a matter of pricing in probabilities into each stock.

That’s what I find fascinating about the price action of both SGML and ATLX stock today. While some talks have already reportedly taken place between Tesla and Sigma, it’s unclear whether something will materialize. In order for a deal to get done, Musk will want to know he’s getting the best exposure at the right price.

So far, the market seems to believe that Atlas is the better target. In any case, valuations across the lithium mining sector could get a boost if M&A activity picks up. Accordingly, perhaps the right move right now is to pick any lithium producer and buy shares — if this rising tide is indeed only starting to rise.

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 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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