LIT Declines, The Value Proposition Improves: The Trend Remains Negative

seekingalpha2023-11-29

Lithium prices have experienced a significant decline, dropping 79.6% from April 2022 to November 2023.EV stocks, including the GX Autonomous & Electric Vehicles ETF and the KS Electric Vehicles and ...

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Negative\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-11-29 05:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4654680-lit-declines-the-value-proposition-improves-the-trend-remains-negative><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Lithium prices have experienced a significant decline, dropping 79.6% from April 2022 to November 2023.EV stocks, including the GX Autonomous & Electric Vehicles ETF and the KS Electric Vehicles and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4654680-lit-declines-the-value-proposition-improves-the-trend-remains-negative\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4550","symbol_name":"红杉资本持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4654680-lit-declines-the-value-proposition-improves-the-trend-remains-negative","article_id":"2387121690","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1454060062/image_1454060062.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2387121690","pubTimestamp":1701206787,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Lithium prices have experienced a significant decline, dropping 79.6% from April 2022 to November 2023.EV stocks, including the GX Autonomous & Electric Vehicles ETF and the KS Electric Vehicles and 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TRANSITION \"CRH\" (SGD) ACC","SQM":"智利矿业化工","FDN":"First Trust Dow Jones Internet I","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","LU2063271972.USD":"富兰克林创新领域基金","LIT":"Global X Lithium & Battery Tech ETF"},"translate_title":"LIT下降，价值主张改善：趋势仍然是负面的","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ALB":1,"TSLA":1,"TM":1,"SQM":1,"PILBF":1,"LIT":1,"KARS":1,"DRIV":1,"FDN":0.9,"03160":0.6},"content_text":"Lithium prices have experienced a significant decline, dropping 79.6% from April 2022 to November 2023.EV stocks, including the GX Autonomous & Electric Vehicles ETF and the KS Electric Vehicles and Future Mobility ETF, also have seen a decline in value.The GX Lithium & Battery Tech ETF has underperformed compared to other EV-related stocks, but may present a contrarian investment opportunity for 2024.   Just_SuperIn early June 2022, in a Seeking Alpha article, Lithium and the LIT ETF, I wrote: At the $71.92 level on June 2, LIT recovered from the most recent April 26 $61.67 low. The trend in 2022 remains bearish, and if Goldman Sachs is correct, LIT could fall further. However, this lithium ETF is a candidate for accumulation over the coming months as the demand for the metal will continue to rise. A scale-down buying approach, leaving plenty of room to add as LIT falls, could be a road to significant profits when the illiquid lithium market turns higher over the coming years. Put the LIT ETF on your investment radar.  Over nearly a year and a half, I have had Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) on my radar. Still, the price action in the ETF and underlying lithium market have not supported any purchase or accumulation strategy. Goldman Sachs was correct as the trend has been lower, and the market trend across all asset classes is always your best friend. Lithium prices, along with many other industrial metals, have declined as interest rates increased. Moreover, earnings at EV makers have declined, sending EV stocks lower. As the industry suffers, the demand for lithium has yet to experience the explosive growth many market participants had expected. Meanwhile, in late 2023, the bearish trend continued, but lithium’s value proposition improved. In June 2023, lithium producers warned that global supplies would fall short of future demand. Lithium prices have plunged In the June 2022 article, I pointed out that lithium carbonate prices reached $61,943 per metric ton in April 2022.   Lithium Five-Year Price Chart (Source: Lithium - Price - Chart - Historical Data - News)At the $12,650 per ton level in late November 2023, lithium carbonate prices experienced a whopping 79.6% decline. EV stocks have moved lower In November 2021, increasing demand for electric vehicles pushed lithium to a record high in early 2022. EV stocks reached highs in late 2021 when they ran out of upside steam.   Ten-Year Chart of the DRIV ETF Product (Barchart)The GX Autonomous & Electric Vehicles ETF (DRIV) reached a $32.37 per share high in November 2021. DRIV’s top holdings include:   Top Holdings of the DRIV ETF Product (Seeking Alpha)At $22.91 on Nov. 29, DRIV has declined 29.2% from the November 2021 high.   Ten-Year Chart of the KARS ETF Product (Barchart)The KS Electric Vehicles and Future Mobility ETF (KARS) did even worse, falling 55.9% from a $55.85 November 2021 high to $24.64 per share in late November 2023. KARS’s top holdings include:   Top Holdings of the KARS ETF Product (Seeking Alpha) TSLA is the bellwether stock DRIV and KARS’s top holdings include Tesla (TSLA), the world’s leading EV maker, and the company with the leading market capitalization for all automakers.   The Leading Automakers by Market Cap (companiesmarketcap.com)The chart shows TSLA is the king of carmakers, with more than triple the market cap of second place Toyota (TM). TSLA is the bellwether EV maker, and its performance since late 2021 reflects the sector’s weakness.   Ten-Year Chart of TSLA Shares (Barchart)The chart shows TSLA’s 40.9% decline from the November 2021 $414.50 high to $244.84 per share on Nov. 29, 2023. LIT tracks lithium: A bearish trend since November 2021 The Global X Lithium & Battery Tech ETF (LIT) has done worse than TSLA shares since the November 2021 highs.   Ten-Year Chart of the LIT ETF Product (Barchart)LIT has dropped 50.6% from $97.13 to $48.02 per share, underperforming TSLA and DRIV and slightly outperforming the KARS ETF product. LIT’s top holdings include:   Top Holdings of the LIT ETF Product (Seeking Alpha)Since June 2022, LIT has trimmed its exposure to Albemarle Corp (ALB) and the Sociedad Quimica y Minera de Chile S.A. ADR (SQM). Meanwhile, it has increased exposure to Pilbara Minerals Ltd. (OTCPK:PILBF) and TSLA has dropped from the list of top holdings. As of Nov. 29, 2023, ALB dropped 63% from its November 2022 high, SQM was down 56.7% from its May 2022 peak, and PILBF was 35.6% lower than its November 2022 high. The bottom line is the market’s enthusiasm over EVs and lithium has declined significantly in 2023. Out of favor in late 2023 but a contrarian asset for 2024 Identifying value is critical as 2023 ends and markets move into 2024. Interest rate increases may be in the rearview mirror, but rates remain the highest in years. Deficits, the potential for recessionary pressures, and a highly volatile geopolitical landscape have investors and traders seeking investments that offer value and the potential for capital appreciation.  Addressing climate change and technological advances in electric and autonomous vehicles offer far more value in late 2023 than during the past two years. I have not pulled the trigger on accumulating the LIT ETF product since my June 2022 Seeking Alpha article. Meanwhile, at the $48 per share level on Nov. 29, 2023, the correction has taken the ETF to a level that offers a far more attractive valuation. LIT is a contrarian play as the trend remains bearish. Picking bottoms is dangerous as markets tend to fall further than supply and demand fundamentals dictate. Leave plenty of room to add on further declines. But beginning to accumulate at the $48 per share level is a reasonable, rational, and logical approach to the lithium and EV markets for 2024 and beyond.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2387121690"}