New concerns regarding its expansion into the United States are pushing Li-Cycle Holdings (NYSE:LICY) stock down today.
The Toronto-based battery recycling company recently reported third-quarter earnings. On the call, its leaders discussed the company’s decision to pause construction on its planned facility in Rochester, New York. Investors had been hoping to see progress on the planned Rochester Hub Project resume quickly and quietly, but the Q3 earnings call has cast doubt over the company’s future. LICY stock has fallen more than 60% and doesn’t show any signs of slowing down.
Why does the future appear to be so bleak for Li-Cycle at a time when the battery recycling market is projected to keep growing? Let’s take a closer look.
What’s Happening With LICY Stock
It hasn’t been a good year for Li-Cycle. Demand for its services may be high, but LICY stock has spent 2023 trending downward. As of this writing, it is down 88% year-to-date (YTD). Its status as a microcap penny stock likely made investors nervous, even when the company announced its plans to expand. But since it paused construction on the Rochester Hub Project in October 2023, shares have been falling faster than ever.
Now that the new U.S. facility’s future looks highly uncertain, LICY stock is likely to keep falling further. The company’s updates didn’t reassure anyone that Li Cycle’s problems would be temporary. As founder and CEO Ajay Kocchar stated on the call:
“In summary, the escalating construction costs combined with continued delays in closing complicated financings were leading to lower current and projected cash balances.”
The reporting outlet also notes that while Li-Cycle has been offered a $350 million loan from the federal government, the funds still have yet to be processed. All this strongly implies that the company is facing an uncertain future.
Prior to the construction pause, InvestorPlace‘s Louis Navellier warned investors to avoid LICY stock due to its cash reserve problems. Recent events suggest that his bearish thesis was correct then and is even more appropriate now.
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On the date of publication, Samuel O’Brient 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.
