Lithium Americas (NYSE: $LAC) Plummeted 29.71%
Lithium Americas Corp. BATS:LAC
DEXWireNews
The stock price of Lithium Americas (NYSE:
LAC
) has experienced a sharp decline, plunging by over 27%, marking its biggest single-day drop since April 2022. This decline follows the announcement of a new fundraising plan by the company. Lithium Americas (
LAC
) has been under significant pressure for some time, and as a result, its stock has plummeted by over 81% from its all-time high in November 2021.
This sharp decline in stock price coincides with two principal events. First, the price of lithium has taken a severe hit in recent months due to oversupply concerns. Second, there are indications that the demand for electric vehicles is on the decline. In the United States, many vehicle dealers have issued warnings that EVs are not selling as fast as they were previously. Consequently, many dealerships have shifted their focus back to Internal Combustion Engine (ICE) vehicles.
One positive development for Lithium Americas is the completion of a spin-off of its operations into two companies: Lithium Argentina and Lithium Americas (
LAC
). This strategic move has enabled the company to streamline its operations. Additionally, the company has made a significant discovery in Nevada, which will become the largest lithium mine in the United States by 2026. The mine is currently being developed with the assistance of the Biden administration, which has committed to providing $2.26 billion.
However, the decision by Lithium Americas' management to raise $275 million to fund the development of the Thacker Mine in Nevada has resulted in a significant decline in the stock price. This move will dilute the shareholding of current investors. Despite this, Lithium America's investors remain optimistic that the company will benefit from the ongoing energy transition, and as an American company, it will enjoy favorable terms offered by the government through the Inflation Reduction Act (IRA).
Nevertheless, the current lithium abundance era presents risks to this optimistic outlook. Countries such as Australia, Chile, Argentina, China, and Brazil are all increasing their lithium production, with more countries expected to join the market, leading to an oversupply.
In terms of the stock price forecast, the Monthly chart shows that the
LAC
share price hit a low of $3.80 in February, bounced back to $7.73 this month to form a double-top pattern, and has since fallen below all moving averages . The stock has formed a down-gap . As a result, it is expected to continue falling as sellers target the key support at $3.80, its lowest level this year.
