Why Shares of Lithium Americas Are Plunging Today – The Motley Fool

Date:

- Advertisement -

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
While the S&P 500 and Dow Jones Industrial Average are both sliding lower today, shares of Lithium Americas (LAC -3.27%) are outpacing the downward slide in the market writ large. Addressing the company’s recent deal with Arena Minerals, an analyst from B. Riley seems to be unenthusiastic about the transaction, electing to keep the same price target and rating on the stock that he had prior to the announcement.
As of 3:32 p.m. EST, shares of Lithium Americas are down 3.8%, recovering slightly from their earlier slide of 5.7%.
Expecting the scale of Pastos Grandes to balance out equity dilution in the days ahead, Matthew Key, an analyst at B. Riley, maintains a buy rating on shares of Lithium Americas and a price target of $39.
On Tuesday, Lithium Americas announced that it had entered into a definitive arrangement agreement with Arena Minerals to acquire all outstanding shares that Lithium Americas does not already own. Addressing the merits of the deal, Jonathan Evans, CEO of Lithium Americas, stated,
This transaction will consolidate the highly prospective Pastos Grandes basin, and creates an exciting opportunity for Lithium Americas, a Canadian incorporated and headquartered company, to add incremental growth in one of the most important lithium producing regions in the world.
Lithium Americas projects the transaction will close in the third quarter of 2023.
While the transaction with Arena Minerals offers great potential to increase value in Lithium Americas’ portfolio, investors seem skeptical. Shares of Lithium Americas dropped on the day of the announcement regarding the entrance into the agreement. With the analyst’s unchanged price target, moreover, investors continue to remain unimpressed — pessimistic, even, that the deal will move the needle for this lithium company that’s still in the pre-revenue phase of its development.
For those who have had Lithium Americas on their radar, the recent sell-off provides a good buying opportunity. However, plenty of risks remain, so investors should allot their positions accordingly if they decide to click the buy button.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.

Market data powered by Xignite.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

ADVERTISEMENT

Popular

More like this
Related

IMF predicts global public debt will be at 93% of GDP by end of 2024

Global public debt will exceed US$100 trillion by the...

World Bank’s Banga says more bilateral debt forgiveness needed

World Bank President Ajay Banga said on Thursday (17...

Ghana, creditor panel agree on debt restructuring, paving way for IMF cash

Ghana has finalised a pact with its official creditor...

Nigeria strikes deal with Shell to supply $3.8 billion methanol project

Nigeria has struck a deal for Shell (SHEL.L), opens new...