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Polypore, Rockwood Shares Gain Amid Speculation On Tesla Gigafactory

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Traders and investors are speculating Thursday about the possible beneficiaries from Tesla's (NASDAQ: TSLA) gigafactory development project. Last night the maker of electric vehicles announced that it intends to use proceeds from a $1.6 convertible note offering for developing the company's gigafactory and Gen III vehicles.

Wedbush analyst Craig Irwin noted Polypore (NYSE: PPO) could see an “attractive” future royalty stream from the Tesla gigafactory. This is based on royalties received by Polypore from Sumitomo for use of certain lithium-ion separators. Sumitomo is a supplier to Panasonic for separators used to assemble cells for the Model S. In the fourth quarter, Polypore received $3.5 million in royalty payments from Sumitomo.

Aleksey Yefremov, analyst at Bank of America, believes supplier Rockwood Holdings (NYSE: ROC) is “best positioned” among global lithium producers for Tesla's gigafactory. Rockwood would be a direct seller of lithium to supply the new Tesla factory. Yefremov estimates that the gigafactory may consume 9k tons of lithium, translating into a $0.25-$0.30 earnings per share opportunity for Rockwood.

Shares of Polypore are trading up nearly 2 percent to around $32.70; Rockwood shares are up about 3 percent to $80.67 at last check.

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