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Lithium Americas Corp. (LAC) stock forecast 2022 – 2030: Another record high?

By Fitri Wulandari

Edited by Jekaterina Drozdovica

09:28, 5 April 2022

Stuttgart, Germany - 06-20-2021: Person holding mobile phone with logo of Canadian company Lithium Americas Corp. on screen in front of business web page. Focus on phone display. Unmodified photo.
Lithium Americas Corp. (LAC) stock forecast 2022 – 2030: Another record high? Photo: T. Schneider / Shutterstock.com

Lithium Americas Corp. (LAC) stock enjoyed a fruitful 2021 amid rising lithium prices as demand for electric vehicles (EV) surged due to a global race in energy transition.

In 2022, when the commodity prices are booming, the Canadian mining stock is close to repeating the record highs achieved a year before.

How long can the stock maintain its momentum and which factors are shaping Lithium Americas share price forecast?

Latest earnings

In recent LAC stock news, the Vancouver-based company recorded a net loss of $38.48m (£29.33m) in 2021, up $36.35m in the previous year, according to LAC’s full-year 2021 financial results released on 17 March.

The company attributed the higher loss to higher expenditures at Thacker Pass, which is in the exploration and evaluation stage.

LAC spent $35.96m on exploration and evaluation expenses in 2021, twice the  $17.72m in 2020 that all went to Thacker Pass. The Caucharí-Olaroz project is in the development stage, therefore it does not have exploration-related expenses. 

Since LAC hasn’t started commercial production, it has yet to  book any net income.

Construction for stage 1 production capacity at Caucharí-Olaroz has been approximately 85% completed with commissioning targeted to start in the second half of 2022. The project’s stage 1 production capacity is 40,000 tonnes per annum (tpa) of battery-quality lithium carbonate, the company said in its presentation. 

Work for Caucharí-Olaroz’s second-stage expansion with production capacity of 20,000 tpa is progressing. 

“Despite a $100 million increase in capital costs, we think the project will generate value for shareholders, given our outlook for higher lithium prices over the next several years and its low cost of production,” said Seth Goldstein, senior equity analyst at Morningstar in the 18 March note.

In November 2021, LAC  increased its strategic investment in Toronto-based Arena Minerals Inc. (AN), which has lithium brine projects in Chile and Argentina, to 17.4%,. In January 2022, the company completed its acquisition of Toronto-based Millenial Lithium Corp. and 100%- owned Pastos Grandes lithium mine in Argentina that is located 100km from Caucharí-Olaroz.

For Thacker Pass, the company continued to advance the Feasibility Study with increased capacity of 40,000 tpa of lithium carbonate for the first stage and incorporated a second phase expansion to reach a targeted total capacity of 80,000 tpa.

LAC expects to have results of the Feasibility Study in the second half of 2022. 

Lithium Americas stock analysis: Fruitful 2021

The stock started 2021 at around $13 per share. It traded between $20 to $28 in the middle of January to the first week of February 2021. After that, LAC shares traded back to below $20 until early September 2021, as shown on the LAC stock chart below.

The stock started to climb above $20 in the second week of September and continued its advance until hitting its all-time high closing price of $40.96 on 29 November. The next day, the Lithium Americas Corp stock briefly hit a record high of $41.56 before retreating and closing the year at $29 per share. 

Lithium Americas stock, 2017 – 2022

Rising prices of both spodumene, a lithium-rich rock, and lithium carbonate (lithium salt) had fuelled a rally in the company’s stock, which surged 132.03% over 2021.

The global green transition race has boosted demand for batteries for usage in EV to power generation, resulting in a tight market despite fast-growing supply. 

The lithium carbonate spot price in China quadrupled during 2021. It surged from around 53,000 yuan/tonne ($8,328.88) in early 2021 to 280,000 yuan ($44,001) by the year end. 

As of 1 April, the lithium carbonate price stood at 496,500 yuan/tonne ($78,024.32), according to data from Trading Economics. The price of the battery-metal kept rising into 2022, gaining nearly 79% so far this year amid soaring demand and limited supply.

“Surging energy prices due to Russia’s invasion of Ukraine strengthened the appeal to transition away from fossil fuels, adding to the booming demand of electric vehicles,” the economic data provider said in the note.

Biden’s lithium push drives the stock higher

On 31 March, President Joe Biden announced an executive order that invoked the Defense Production Act, which enables the US government to provide more support for the mining, processing and recycling of critical minerals, including lithium, nickel, cobalt, graphite and manganese. The minerals are used in the production of large-capacity batteries. 

“Demand for such materials is projected to increase exponentially as the world transitions to a clean energy economy. To promote the national defence, the United States must secure a reliable and sustainable supply of such strategic and critical materials,” Biden said in the statement.

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The announcement boosted sentiment around lithium miners, including for LAC. The company’s stock rose 4.42% to close at $38.49 after briefly hitting the near all-time high level of  $40.14, near its all-time high closing price in November. LAC stock price has risen 33.72% this year.

The US government’s decision may increase the chance for Lithium Americas to secure funding for development of Thacker Pass. 

On 28 February, the company announced it had submitted a draft application to the US Department of Energy for funding Thacker Pass through the Advanced Technologies Vehicle Manufacturing Loan Program. 

The program provides funding for US companies that engage in the manufacturing of advanced technology vehicles and components used in those vehicles. 

In terms of technical analysis, the short-term sentiment for the stock appeared bullish at the time of writing (4 April), with most moving averages skewed to buy. A Relative Strength Index (RSI) reading of 69 was close to the overbought territory. A move of 70 or above would indicate that the stock could be overvalued and a trend reversal is likely.

The stock was trading above its 10-day moving average of $35, yet below its R1 resistance level of $44. 

Is Lithium Americas a good investment?

The outlook for the stock could be shaped by various fundamental factors. Consulting firm Wood Mackenzie forecast on 23 March that global cumulative lithium battery capacity could rise over five-fold to 5,500 gigawatt-hour (GWh) between 2021 and 2030.

The Asia-Pacific region, led by China, accounted for 90% of the world’s battery manufacturing in 2021. However, the firm forecast that Asia-Pacific’s share is expected to drop to 69%, while North America’s cell capacity could increase tenfold by 2030.

North America still lags behind Europe, which is set to overtake the region this year, according to Wood Mackenzie. Europe is forecast to account for over 20% of global capacity by 2030 thanks to its rapid expansion.

“The electric vehicle (EV) market accounts for almost 80% of lithium-ion battery demand. High oil prices are supporting more markets to roll out zero-emission transportation policies, causing demand for lithium-ion batteries to skyrocket and exceed 3,000 GWh by 2030,” said Wood Mackenzie consultant Jiayue Zheng, adding that the battery supply is unlikely to meet demand until 2023. 

Fitch Solutions in its note on 20 December 2021 forecast that global lithium supply growth will accelerate from 2023 onwards. But at the same time, demand growth is expected to be buoyant as major economies advance their EV penetration, which will support lithium prices. 

“Beyond 2025, we forecast the global lithium market to shift more definitively into deficits, which will push prices significantly higher,” the firm said.

Note that whether LAC is a suitable investment for your portfolio depends on your personal circumstances and risk tolerance, among other factors. You should do your own research into the company’s performance and evaluate the level of risk you are prepared to accept before investing.

Is LAC stock a buy, a sell or a hold?

Analysts polled by various stock ratings websites rated the stock as a ‘buy’. A consensus of 14 analysts polled by the MarketWatch rated LAC ‘overweight’ with seven analysts recommending a ‘buy’. Two analysts rated ‘overweight’ and five analysts rated a ‘hold’. The analysts offered an average LAC stock price target at $37.29, ranging from the high of $44 to the low of $23.75.

A consensus ‘buy’ rating was given by 11 analysts surveyed by MarketBeat, with one giving it a ‘hold’ recommendation and 10 rating the stock as a ‘buy’. The consensus LAC stock price prediction for the 12-month period was at an average $39.89 with a high price target of $45.00 and a low-price target of $34.00.

Morningstar maintained its LAC price target of $45 per share fair value estimate, adding it viewed the stock as undervalued, said Goldstein in the note. 

A  ‘strong buy’ was the recommendation of 10 Wall Street analysts polled by TipRanks and it offered an average price target of $35.28 for the 12-month period. However, the price target represented a 9.40% downside from the 1 April closing price of $38.94.

Lithium americas (LAC) stock forecast 2022 – 2025

Although analysts did not provide LAC stock’s five-year forecast, the algorithm-based forecasting site, WalletInvestor, was bullish in its long-term outlook for the stock at the time of writing (4 April). 

In its Lithium Americas stock predictions, WalletInvestor suggested the stock could hit $57.25 in December 2023 and rise to $84.85 in December 2025. By March 2027, LAC shares were forecast to trade at $100.44.

GovCapital was also bullish, predicting LAC stock price to trade at $83.702 at the end of December 2023 and surge to $162.414 by the end of December 2025. The stock was expected to trade at $224.543 by the end of April 2027.

When looking at any LAC stock predictions, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading or investing and bear in mind that past performance is no guarantee of future results.

FAQs

Is LAC stock a good buy?

Analysts mentioned in the article recommended a ‘buy’ for LAC’s stock. However, whether LAC is a suitable investment for your portfolio depends on your personal circumstances and risk tolerance, among other factors. You should do your own research into the company’s performance and evaluate the level of risk you are prepared to accept before investing.

Will LAC stock go up or down?

Most analysts forecast LAC’s stock price will go up due to rising demand from battery manufacturers. Yet note that analyst predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading or investing and bear in mind that past performance is no guarantee of future results.

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