Please ensure Javascript is enabled for purposes of website accessibility

Why Lithium Americas Stock Fell 14% in March

By Beth McKenna - Apr 7, 2021 at 6:11PM

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

Despite its 2021 pullback, this junior lithium miner's stock is up more than 400% over the last year.

What happened

Shares of Lithium Americas (LAC 5.59%), a Canada-based development-stage lithium mining company, declined 14.1% in March, according to data from S&P Global Market Intelligence.

For context, the S&P 500 index returned 4.4% last month.

Two lithium-ion battery packs laying on a flat surface.

Image source: Getty Images.

So what

We can probably attribute the pullback in Lithium Americas stock last month to a combination of its typical volatility and a Wall Street analyst lowering her price target. As to the former, given how fast the stock has run up over the last year (as the chart below shows), some investors likely decided to take some profits. March's 14% pullback is small relative to the stock's gain over the last year. 

On March 3, shares declined about 11% following a move by Canaccord Genuity analyst Katie Lachapelle. She maintained the firm's buy rating on the stock but slightly lowered the price target to 30.5 Canadian dollars, or about $24 per share. For context, the stock closed at $14.75 on April 7.

The main takeaway: Lithium Americas didn't release any news last month that materially alters its prospects.

As I previously wrote, in January, the company's Thacker Pass lithium project in Nevada achieved a key milestone: The U.S. Bureau of Land Management issued a Record of Decision for this project following completion of the National Environmental Policy Act process. It expects to receive all remaining state permits and water-right transfers later this year.

LAC Chart

Data by YCharts.

Now what

Lithium is needed to produce the batteries that power electric vehicles (EVs). Given the powerful long-term projected growth of EVs, it's likely there'll be some winners among companies in the EV supply chain, such as those that produce or process lithium or make lithium-ion batteries.

That said, as I've previously written, Lithium Americas stock "remains speculative since the company isn't yet mining any lithium for commercial sale. So, only investors who are quite risk-tolerant should consider buying it."

 

Beth McKenna 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.

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

Lithium Americas Corp. Stock Quote
Lithium Americas Corp.
LAC
$27.37 (5.59%) $1.45

*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 analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

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.