Popular lithium play PLS is now incredibly 17.6% short-sold, on the surface, it would appear that the stock was either heavily over-priced or these traders could be in for a rude awakening. However, in the case of PLS, it is all about the lithium price as opposed to the weaknesses within the company itself, lithium has tumbled by ~75% in 2023, which on the stock level has been compounded by a crowded belief by investors that anything ESG/EV facing was a lay–down misère over the years ahead – its rarely that easy, lithium ETF’s have more than halved over the last 2-years. The global supply response for lithium has emerged faster than many imagined, making it very hard to forecast the commodity with much to understand in this opaque and evolving sector.
- We believe PLS shares are nearer their arrival than departure after a 37% pullback since June, but it’s hard to argue with the tape at this stage.
MM is neutral toward PLS around $3.50
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