Please ensure Javascript is enabled for purposes of website accessibility

Why Lithium Americas Stock Just Dropped 10%

By Rich Smith – Aug 18, 2020 at 12:55PM

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

Four days after earnings, investors realize: Lithium Americas didn't have any "earnings."

What happened

What went up just came back down.

After three straight days of enjoying nothing but gains, shares of Canadian lithium miner Lithium Americas (LAC 2.54%) are in full retreat Tuesday, falling 10% through 12:05 p.m. EDT.

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

So what

Why? Absent any other "news" today that might be moving the stock, I have to wonder if reality may be setting in for investors and that attention to this stock's "story" may be giving way to a focus on the company's numbers.

Last week, as you may recall, Lithium Americas regaled investors with a story of how it's making progress getting two separate "projects" set up to begin producing and refining lithium for use in electric-car batteries. One project in Argentina is "47% complete." A separate pilot project in Reno, Nevada "has resumed full operations."

Now what

Viewed from one angle, these are good stories, perhaps good enough to allay worries over the company's reporting a $0.07 per-share loss for the quarter, and encouraging investors to look, instead, for profits in the future.

Looked at another way, however, the fact that these projects are moving toward completion means they're not currently complete. Until they are, and until Lithium Americas is producing revenue, it's impossible to know how profitable those revenues will be -- or even whether the company will be profitable at all.

Until that is known, perhaps investors are right to be a bit more cautious about investing in Lithium Americas stock.

Rich Smith 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.

Stocks Mentioned

Lithium Americas Corp. Stock Quote
Lithium Americas Corp.
$23.83 (2.54%) $0.59

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.