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Why Lithium Americas Stock Just Jumped 10%

By Rich Smith – Aug 10, 2021 at 1:18PM

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Wall Street is turning bullish on lithium -- and that's good news for Lithium Americas stock.

What happened

Ever since the company reported earnings last week, Lithium Americas (LAC -7.04%) stock has been on a tear -- shooting up nearly 27% in four trading days. Today, the stock is getting another big boost, rising 10.2% through 11:30 a.m. EDT.

But the reason doesn't seem to be Lithium Americas at all, or at least not entirely.

Stack of Li-ion batteries next to a rising stock chart.

Image source: Getty Images.

So what

Last week, Lithium Americas had some modest good news for its shareholders. Although still losing money and not yet producing revenue, the company is making progress toward production at its Caucharí-Olaroz project, which is "on track to achieve first production by mid-2022." Also, Lithium Americas' Thacker Pass feasibility study should be completed by the end of this year. 

Wall Street didn't have much to say about any of that at the time. But in the days following Lithium Americas' report, analysts have raised price targets on rival lithium miners Albemarle twice and Livent once. (In addition, reports that at least one analyst, Vertical Research Partners, has upgraded Livent stock from sell to hold.)

Now what

And these upgrades for its rivals could be good news for Lithium Americas stock as well. As Citigroup pointed out yesterday in its price target hike on Livent, lithium metal prices look generally higher this year than they were last year. And as more and more electric car producers begin producing more and more new models, the trend here seems pretty clear: Demand for lithium is heading higher -- and Lithium Americas stock will be coming along for the ride.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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.

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