LAC - Lithium Americas (LAC) stock price flipped a key resistance: is it a buy?
2023-09-15 14:06:06 ET
Lithium Americas ( NYSE: LAC ) stock price has staged a strong recovery in the past few days as investors cheer the company’s recent find. It has also risen as the management works to break itself into two firms. The shares jumped to a high of $20.82, ~28% above the lowest level this year.
Lithium price is a major challenge
Lithium Americas is a major company that hopes to become the biggest player in the lithium industry. This is a major sector that is growing rapidly as more people move to electric vehicles.
The company has two major operations in the United States and Argentina. Its Argentinian operations is the biggest lithium carbonate brine operation to come online in over 20 years. It started its stage one operation in June this year.
Most importantly, the company said that its Thacker Pass project in Nevada had the biggest reserves in the world . It now hopes to start producing this lithium by 2026 and become the biggest producer in the US.
Lithium Americas is now working to separate the two companies that will be listed in the US and Canada. The goal is to create two independent and lean companies in the lithium industry.
Therefore, bulls believe that Lithium Americas will play a major role in the energy sector as the world moves to EVs. Several countries like China, UK, and the US have set targets for moving fully electric.
The challenge for Lithium Americas is that the price of lithium has been in a freefall and analysts expect it to keep dropping. For one, the world is now adequately supplied with lithium and will move to a surplus this year.
Many countries have discovered lithium reserves recently. Some of the most notable countries in the lithium industry are Zimbabwe, Chile, and Australia. Therefore, this oversupply could see prices remain depressed for a while.
Lithium Americas stock price forecast
The daily chart above shows that the LAC stock price has been in a strong downward trend for months. It recently crossed the important support at $17.67, the lowest level in January. It was also the lower side of the descending triangle pattern.
LAC share price has now bounced back and moved above the descending red trendline that connects the highest swings since September last year. It has also jumped above the 50-day moving average.
Therefore, the outlook for the stock is bullish, with the next key resistance level being at $23.45, the highest point in May this year. In the long term, however, the shares could resume the bearish trend as concerns about lithium prices remain.
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