What happened

Shares of Enovix Corporation (ENVX -4.09%) ended Friday's session down by 11.2%, according to data from S&P Global Market Intelligence, ending a volatile but otherwise bullish week on a low note. Investors are struggling to value the lithium battery manufacturer against a backdrop of soaring lithium prices.

So what

Don't look for a specific headline to explain Enovix's sharp sell-off on Friday. You won't find one. At the same time, don't look for news that justifies this week's test of new 52-week highs: You won't find one specifically prompting that move either. Rather, this ticker's sizable run-up from July's low and extreme volatility since early August largely reflects lithium's skyrocketing prices. It's prompting the stock's recent buyers to rethink their purchase...again.

Lithium is the metal used in batteries for electronics like cellphones and laptops. Most notably, significant quantities of lithium are needed for the batteries that power electric vehicles (EV). The rapid growth of EV usage has strained supply chains, with shortages expected for the foreseeable future. While consumers can tolerate a fair number of price hikes, with lithium reaching record highs just this week (and with no end to the pressure in sight), the market isn't entirely sure how to evaluate related companies' futures; customers may finally balk.

Enovix Corporation is no exception to this uncertainty.

That being said, shares of relatively small Enovix already have a history of volatile swings both up and down just since the company's special-purpose acquisition company (SPAC)-based public offering back in the middle of 2021. It entered into the current lithium-pricing scenario already subject to extreme volatility.

Now what

Alternatives to lithium-based batteries are few and far between. In light of the fact that many more lithium mining projects are planned if not already in the works, lithium prices should eventually cool down to more sustainably marketable levels. To this end, Enovix Corporation has a bright enough future for more speculative investors looking well down the road.

For the average investor seeking a balanced portfolio reasonably protected from significant risks, though, today's steep sell-off from Enovix -- which isn't its first in just the past few weeks -- reminds us this ticker brings a great deal of risk to the table. Not only is the lithium battery business becoming increasingly competitive; it's highly subject to a lithium supply Enovix has little control of.