Market Overview

Here's How Much Investing $1,000 In The 2018 Debut Of Piedmont Lithium Would Be Worth Today

Here's How Much Investing $1,000 In The 2018 Debut Of Piedmont Lithium Would Be Worth Today

Investors who owned stocks since October 2018 generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in that time is roughly 31%. But there’s no question some big-name stocks have done much better than others in that stretch.

Piedmont Lithium’s Bumpy Ride: One stock that has struggled in the past two years had its fortunes change dramatically on Monday.

Shares of lithium company Piedmont Lithium (NASDAQ: PLL) skyrocketed more than 300% on Monday after the company announced a “five-year fixed-price binding agreement” to supply lithium to popular EV maker Tesla Inc (NASDAQ: TSLA).

Tesla has committed to purchasing about a third of Piedmont’s projected 160,000 tons of lithium-rich spodumene concentrate per year for at least five years, but that deal could be extended up to 10 years and the amounts may be increased.

See Also: Tesla Inks 5-Year Supply Deal With Australian Miner To Satisfy Growing Hunger For Lithium

Piedmont began trading on the Nasdaq on May 7, 2018. The listing wasn’t technically an IPO because the stock had traded on the Australian Stock Exchange and over-the-counter in the U.S. for years. On its first day of non-OTC U.S. trading, Piedmont opened and closed at $12.75.

Piedmont investors see the stock as a play on the nascent global EV market, which requires lithium for its batteries. Both Tesla and Piedmont must agree to begin deliveries some time between July 2022 and July 2023.

From its opening price of $12.75, Piedmont shares initially jumped as high as $17.98 by June 2018 but finished 2018 down more than 50% from its initial U.S. trading price.

Piedmont settled in the $7.50 to $8 range in the first quarter of 2019, before breaking out to the upside and topping out at $14 in April 2019. However, steady cash burn, mounting losses and slumping lithium prices weighed on the stock throughout much of 2019.

Piedmont dropped below $10 in August, below $8 in September and eventually dropped as low as $6.05 in October. Unfortunately, 2020 didn’t get off to a great start either for Piedmont investors.

2020 And Beyond: Piedmont hit its all-time Nasdaq low of $4 in March during the COVID-19 sell-off before bouncing back to above $10 in September. News of the Tesla deal sent Piedmont shares skyrocketing on Monday to as high as $53.77 at time of publication.

Overnight, Piedmont shares went from being a significant market laggard since its U.S. debut to a home run investment. In fact, $1,000 in Piedmont shares purchased at the initial listing price would now be worth about $2,745.

The Tesla announcement certainly took Wall Street by surprise. The average price target among the three analysts covering the stock is just $20 or about $43.7% below Monday’s trading price.


Related Articles (PLL)

View Comments and Join the Discussion!

Posted-In: electric vehicles lithiumEducation Movers Trading Ideas General Best of Benzinga