A good gauge of a company’s strength is its ability to shake off bad news and keep rising. That’s exactly what markets are seeing from Piedmont Lithium (NASDAQ:PLL) stock today. The Australian lithium miner is coming off a volatile month, and it almost just took a turn for the worse.
Today, short-seller Blue Orca Capital published a damning short report accusing the company of corrupt activity that undermined its production goals. This is exactly the type of news that investors don’t want to see, but it hasn’t impacted Piedmont Lithium too much. PLL stock has managed to shake off the negative momentum and has been rising for most of the day. This speaks to the strength of the company as an investment vehicle.
Does this mean that Piedmont is still a good stock to buy as demand for lithium increases? Let’s take a closer look at the short report and assess what investors should be expecting in the months ahead.
Short Report No Match for PLL Stock
It’s not easy to rally when a short report from a noted firm has just been published. But that’s exactly what PLL stock has been doing all day. As of this writing, it is up 0.57% for the day after spending the morning trekking gradually upward.
This may not seem like much, but plenty of other companies would be sinking if a report accusing them of corruption came to light. Earlier today, Blue Orca Capital tweeted the following:
We are short Piedmont Lithium $PLL because we found evidence that mining licenses in Ghana were obtained through what appears to be textbook corruption. We think this kills the Ghana lithium project and $PLL’s fantasy of near-term production.
Report at: https://t.co/SsicUF1vPk pic.twitter.com/l1gMfydjhM— Blue Orca Capital (@blueorcainvest) March 8, 2023
The short report alleges that Piedmont engaged in corrupt practices to obtain licenses to mine lithium in Ghana, a factor upon which the success of its new Tennessee facility hinges. Per the report:
“We are short Piedmont because without Atlantic’s Ghana supply, Piedmont and any promise of near-term revenue from its much-hyped Tennessee facility are dead on arrival. Without Ghana, industry experts and even a former Piedmont senior executive have confirmed that Piedmont is unlikely to find a source of replacement spodumene.”
It’s easy to read an accusation like that and be nervous about a company’s future. But PLL stock has responded to the short report in a way that makes one thing clear: the market doesn’t care about the report.
That could be because the company has a lot going for it. It boasts strong fundamentals and has an agreement with Tesla (NASDAQ:TSLA) to help supply lithium for its electric vehicle (EV) battery operations. Joining forces with the leader of the EV sector could help make Piedmont a leading player in a booming industry of its own.
What Comes Next
All that isn’t to say that investors should completely disregard the bearish case made by Blue Orca. Details are still emerging, and if further damning findings are revealed, it could certainly push PLL stock down. However, details are still emerging. As of now, it is still trending in the green, demonstrating its power in a market that would push other stocks down.
In this, we see why InvestorPlace contributor Faisal Humayun describes PLL as an overlooked lithium stock with the potential to outperform the market. Lithium demand is rising as the EV boom continues and the opportunity for companies in the space is significant. Piedmont has proven that it can hold its own, even in unfriendly market conditions.
On the date of publication, Samuel O’Brient 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.
