Sector leader PLS plunged over 17% on Wednesday, suggesting there was plenty of hot money in the stock that needed to be washed out. PLS isn’t profitable, having posted losses in 1H25, but with operational improvements and cost efficiencies underway, like a few in the space, it’s set to turn the corner if lithium can build on recent gains. Ironically, as we talk about “Hot Money” on the long side, PLS still carries an almost 17% short position, some of which might be tempted to cover into the current weakness below $2. From an investment perspective, this remains a lithium price play but with some support from China, albeit mixed, and mines being mothballed around the world, reducing supply, the stock looks to have seen its darkest days.
- We like the risk/reward below $2 from a trading perspective, but note it’s high risk.
MM is cautiously bullish towards PLS
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