Please ensure Javascript is enabled for purposes of website accessibility

Why Piedmont Lithium Stock Dropped Today

By Rich Smith - Mar 4, 2021 at 6:48PM

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

Piedmont is coming to America. Hurray?

What happened

Shares of Australian lithium mining company Piedmont Lithium (PLL), which currently trades on the Nasdaq in the form of American Depositary Shares (ADS), representing common shares on the Australian Stock Exchange, are coming to America -- and it seems investors aren't happy about it. Piedmont stock dropped 19% in Thursday trading.

So what

Thursday probably should have been a good day for Piedmont shareholders, seeing as B. Riley Securities raised its price target on the stock from $66 to $93 a share this morning. Citing improved lithium prices overall and "considerably" improved economics at the company's Piedmont Lithium Project in North Carolina, in particular, Riley upped its valuation on the stock, reports However, the stock headed the other way.

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

Image source: Getty Images.

Why? The most logical conclusion is that investors are reacting negatively to Piedmont's Form 6-K, filed with the SEC today, in which the company advises that its board of directors has voted unanimously in favor of redomiciling (i.e. moving the headquarters) to the United States. 

It's not entirely clear why this move is being seen as a negative for the stock, though. Piedmont notes that a U.S. listing will have "increased attractiveness" for U.S. investors and give the company "improved access to lower-cost U.S. debt and equity capital markets, increase demand for the stock, and lower the company's compliance costs." In the near term, however, management admits that there may be some spending necessary to implement the move.

Now what

A new company, Piedmont US, will be formed to hold the assets of Piedmont Lithium, and current holders of Piedmont Australian stock and Piedmont ADS will all exchange their current securities for new stock in Piedmont US. Piedmont will be delisted from both the Australian ASX and the Nasdaq and replaced by Piedmont US on both exchanges -- assuming shareholders vote to approve the transaction.

Piedmont shareholders will get their chance to vote on the move on April 5. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Piedmont Lithium Limited Stock Quote
Piedmont Lithium Limited

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

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