From Investor's Business Daily, 05:10 PM ET 08/02/2022:
Lithium stocks aren't repeating their explosive reaction to Q1 earnings, which saw a huge jump in guidance to catch up to a surge in market prices for lithium. Earnings from Livent (LTHM) came in well above estimates after Tuesday's close, but LTHM stock was little changed. Albemarle (ALB) is set to report on Wednesday afternoon.
Huge earnings beats and raises stemmed from the companies recognizing that high lithium market weren't going away any time soon and, particularly for Albemarle, a restructuring of contract prices to more closely reflect market prices.
The Q1 reports, and a subsequent guidance hike from Albemarle on May 23 to reflect more contract renegotiations, saw LTHM stock hit an all-time peak, while ALB rallied to a six-month high.
Then doubt set in. Goldman Sachs went out on a limb, predicting that prices could crash by 70% over the next year as a lithium surplus emerges. But so far, lithium prices are holding strong, up more than 400% from a year ago, even as prices for some key EV materials such as nickel have fallen.
In a July 14 note, Deutsche Bank analyst David Begleiter predicted "another beat and raise" quarter for Albemarle and called for an ALB stock rally into earnings. That's played out, with ALB stock scoring 10% gains in each of the past two weeks to climb within striking distance of a cup-with-handle buy point.
So far, lithium producers are in the driver's seat as battery and EV makers jockey for supply. Livent will discuss a new supply agreement reached with General Motors, which will see Livent build out processing capacity in the U.S. That will be key for GM EVs to qualify for tax credits under the Democrats' revamped climate legislation.
Livent said in its earnings statement that GM will make an advance payment of $198 million this year. Auto manufacturers "are becoming more focused on securing reliable lithium supply to support their own aggressive electrification plans," Livent CEO Paul Graves said in the earnings statement....
....MUCH MORE
The sector is definitely drawing attention, with create-a-corps and former Canadian marijuana companies making all sorts of announcements. Here's a very fashion-forward press release: "Musk Metals to drill Elon lithium project, Quebec" The company has made the less arduous pivot from gold to lithium (along with a couple name changes) and has a prime Vancouver address, 700 West Georgia Street. Apparently W. Pender Street is now considered déclassé.
Okay, snark over, here's the price action on the two largest producers:
Albemarle :
and Sociedad Quimica y Minera:
