PreMarket Prep Stock Of The Day: Livent Corp

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

To the end the week, Jason Raznick, the CEO and founder of Benzinga, joined the show to comment on the recent price action in the markets both from a short- and long term perspective.

One long-term holding in his portfolio, along with the author of this article, is Livent Corp LTHM, the PreMarket Prep Stock of the Day.

About Livent 

Livent is a pure-play lithium producer formed when FMC Corp FMC spun off its lithium business in October 2018. The company is poised to benefit from from increased lithium demand via higher electric vehicle adoption, as lithium is a key component of EV batteries.

Livent's Poor Long-Term Performance

From its IPO opening price of $16.25 in October 2018, Livent reached $19.85 in December, but fell back to end the year to $13.60. It drifted lower in 2019 and did not find a bottom until August at $5.49. It ended the year at $9.41.

The rally continued into February of this year, when the issue peaked at $12.29, but succumbed to market pressure and fell back to end the month at $8.93. It finally found a bottom on the same day as the broad market, at $3.95 on March 23. 

Livent Hit Harder, With Muted Rebound

The major wave of selling in the broad market took place on Feb. 21 while the index was near its all-time-high. Its overall decline from peak to to trough was 35%.

On Feb. 21, Livent was coming off a disappointing fourth-quarter report the day prior. The issue fell from $11.86 to $10.06.

The decline from $11.86 to the $3.95 bottom in March represents a loss of 67% of the issue's value. 

The subsequent rebound off the low to its high on Wednesday of this week at $6.48 represents a rebound shy of 40%, as opposed to the broad market recouping nearly 60% of its losses at the high of Thursday's session.

If the depth of decline for the issue is measured from its all-time-high, the numbers are much uglier.

Livent Moving Forward

From a technical perspective, there is no reason to be long the issue. Its fundamentals are not much better, as it has posted only one EPS and revenue beat in its six earnings reports since November 2018.

The reason to own Livent could described in the words of Loup Ventures managing partner Gene Munster.

"I do think this is one to own if you share my view that electrification is the future of automotive," Munster said of the stock in an interview with Benzinga.