Lithium Americas Corp. (NYSE: $LAC) is a mining company engaged in exploring and developing lithium deposits in North America, specifically Canada and the US.
On Thursday, April 18, the company announced the sale of 55 million of its common shares for 4% per share to raise $275 million to a negative market reaction.
Market Reacts to Sale of LAC Shares
Following Lithium Americas’ announcement on April 18 that it was selling 55 million shares for $5, a 24.58% discount to its Wednesday, April 17 closing price of $6.63, the shares tanked. At the close of trading on Thursday, April 18, the stock was down 29.71% to $4.66 per share.
In addition to the initial sales, underwriters have been given the option to buy an additional 8.25 million shares at the $5 price. The option expires within 30 days of the closing of the offering, which is expected to be on April 22, 2024. However, the deal is subject to various conditions, including approval by the TSX and NYSE.
Thacker Pass Project
In March, Lithium Americas shares soared after the Biden administration announced a $2.26 billion grant for developing the Thacker Pass Project, the largest Lithium deposit in North America. The new funds being raised via the sale of the shares will also go towards developing this lithium deposit.
Lithium Americas Financial Results
On March 15, 2024, Lithium Americas announced its Q4 and full-year 2023 results. At the time, it revealed that major earthworks at the Thacker Pass project had been completed. It ended fiscal 2023 with around $196 million in cash and cash equivalents. The company has never recorded revenue.
Lithium Americas (LAC) Stock Performance
Following the April 18 announcement of the sale of LAC shares at an over 25% discount, the stock fell 29.71% to $4.66 on Thursday. On Friday, April 19, the stock recovered marginally, rising 1.50% to close at $4.73 per share.
On Monday, March 18, the stock slumped 11.44% to $5.73 after it was delisted from the S&P/TSX Composite Index, which represents around 70% of the total market cap of the Toronto Stock Exchange.
LAC Stock forecast
Eight Wall Street analysts give LAC stock an overall moderate buy rating. They forecast a high of $15 and a low of $6 for their stock. Their average price of $8.57 is an 81.18% upside from the last closing price.
Should You Invest In Lithium Americas?
Lithium Americas is a company in the early stages of development. It is a crucial project for America’s lithium independence, and it has already received $2.26 billion from the Biden administration. Given the growing adoption of EVs and solar in the energy mix, LAC stock’s long-term future looks promising.
While the economy is currently facing macroeconomic headwinds, which have slowed down EV adoption, the long-term forecast shows lithium will be crucial to the future of the global economy. Consequently, LAC shares would be an excellent stock for investors with long-term horizons.
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