The Pullback in Piedmont Lithium is Now Overdone

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Don’t write off Piedmont Lithium (PLL) just yet.

At the moment, the stock is down $15.43.  All after it announced plans to raise cash by selling about 1.8 million American Depositary Shares (ADRs) at $70.

The move is expected to raise about $122.5 million and be used to continue development of its lithium project.  While this will dilute shareholders, it will also provide the company with about $140 million in cash.

With the stock up more than 1,000% over the last year, it’s a good move, and the $15.43 pullback is a bit of an overreaction here.  Wait for PLL to bottom out first before buying.

It could easily run back to about $90, especially with the lithium boom still heating up.

Remember, as Piedmont Lithium CEO Keith Phillips has said lithium supply will struggle to keep up with demand, “and steps will need to be taken to incentivize additional production and exploration of the battery metal,” as noted by S&P Global Platts.  “When people talk about 20% EV penetration by 2025, there might be a zero chance that could happen because there is no way the raw material supply will be ready,” he added.

In addition, by 2026, David Merriman, an expert on EV and battery materials at Roskill, as noted by The Northern Miner, global demand is “expected to exceed one million tonnes.”

“To meet this increasing demand for lithium products, which is more than double that expected this year, we would need to see not just an expansion in output from existing producers but also new producers looking to commission new capacity,” added Merriman. “This will require significant new investment in the industry.”