:max_bytes(150000):strip_icc()/GettyImages-1234112272-d07e2fac3b5d4db994657785b9b60208.jpg "Why Albemarle’s Stock Price Tumbled to Its Lowest Level Since 2020")
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Key Takeaways
- Albemarle shares tumbled Tuesday to their lowest level since late 2020, as Baird trimmed its price target on the stock because of slumping lithium prices.
- Analyst Ben Kallo said lithium prices have been at or below the low end of estimates, leading to a weak second quarter for Albemarle.
- Another report found lithium prices fell to a 2024 low in June, and they’re expected to remain depressed in July.
Shares of Albemarle (ALB), the world’s biggest lithium producer, tumbled as Baird slashed its price target on the stock, pointing to depressed lithium prices.
The stock was down 7.6% at $91.64 in mid-afternoon trading Tuesday, hitting its lowest levels since November 2020. Albemarle was the biggest decliner on the S&P 500.
Baird lowered its price outlook on the stock to $127 from $170, while maintaining an Overweight rating.
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Weak Lithium Prices Weigh
Baird analyst Ben Kallo said that the price of lithium has stayed at or below the “bottom end of guidance” of $15 per kilogram so far this year. Kallo said that Baird believes that “will set up a weak Q2” for Albemarle. The company is set to report second-quarter results July 31.
Research firm TrendForce said in a report Monday that lithium prices “saw a significant drop” last month to their lowest level this year as the downstream battery sector focused on inventory reduction.
Trendforce explained that for July, demand for lithium is expected to remain low, with prices falling to “the sensitive range” of 80,000 to 90,000 Chinese yuan ($11,000 to $12,375) per ton. It added that even with supply-side contraction, “overall supply will still exceed demand as the weak price trend persists.”
Concerns About Impact of U.S. Election
Kallo also pointed to concerns about the effect this year’s U.S. elections could have on the electric vehicle (EV) market, which directly affects lithium battery demand.
Kallo expects volatility going into the vote, and the potential of vehicle manufacturers holding back production or committing to more stringent transition targets afterwards as they await clarity on any potential changes in government EV tax credits.