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Will Cobalt Have Its Own ‘Lithium Moment’ in 2022?

Lithium had a spectacular 2021. According to Benchmark Mineral Intelligence, the lithium price index was up 240% year-to-date to the … Read More
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This article was originally published by Stockhead

Lithium had a spectacular 2021. According to Benchmark Mineral Intelligence, the lithium price index was up 240% year-to-date to the start of December, and still rising.

Records continue to be broken.

Fellow battery metal cobalt also had a strong second half of 2021, rising for 100 consecutive days to hit more than US$70,000/t in December.

 

Unlike lithium, however, cobalt prices remain well below record levels.

While Fastmarkets is predicting prices to taper in 2022, Argus says the best could be yet to come; in the US market, anyway.

US customers are increasingly asking for fixed price contracts, Argus says, which happens when they anticipate steadily rising prices rather than volatile swings in prices over the course of the year.

 

Why will cobalt keep running in 2022?

Two things: a recovering US aerospace sector and lithium-ion battery demand.

Market participants anticipate higher cobalt prices is because of increased demand from aerospace sectors that were hit hard by the Covid-19 pandemic and related restrictions, Argus says.

“This sentiment comes as Boeing, one of the largest aircraft manufacturers, plans to increase production of the 737 MAX to 31 planes/month in early 2022 from its recent rate of 19 planes/month at the end of the third quarter,” it says.

”Airlines that buy these planes are recovering from the economic downturn brought on by the Covid-19 pandemic in 2021, a trend which is forecast to continue in 2022 and will support aerospace manufacturing.”

And increased future chemical demand is expected from US EV battery manufacturing plants that will start in 2022.

“General Motors (GM) plans to open a 30 GWh/yr lithium-ion battery plant in Lordstown, Ohio, in the first quarter of 2022, the first of two planned facilities together with South Korean battery maker LG Chem,” Argus says.

“SK Battery also plans to open a 9.8 GWh/yr plant in Jackson County, Georgia, in 2022, the first of two plants on this site.”

While lithium-ion batteries consume cobalt chemicals such as cobalt hydroxide or sulfate rather than cobalt metal, higher demand for cobalt chemicals can support cobalt metal prices, as metal refiners use these chemicals as feedstock, Argus says.

“This combination of returning aerospace demand and new demand from battery manufacturing should provide support to cobalt’s upward trend into 2022.”

NOW READ: Cobalt stocks guide: Here’s everything you need to know

The post Will cobalt have its own ‘lithium moment’ in 2022? appeared first on Stockhead.




Author: Reuben Adams

Energy & Critical Metals

TSLA Stock Can Survive and Thrive Even With a Supply Chain Crisis

The stock market is still recovering from the latest earnings call from Tesla (NASDAQ:TSLA). In 2021, CEO Elon Musk told the world that he wouldn’t be…

The stock market is still recovering from the latest earnings call from Tesla (NASDAQ:TSLA). In 2021, CEO Elon Musk told the world that he wouldn’t be part of these reports unless he had something important to say. Two quarters later, though, he opted to once again speak to investors. This call brought plenty of important takeaways for investors. Although TSLA stock fell the next day, nothing Musk said should make investors nervous about the coming year. For some of his critics, though, Musk’s comments posed a risk to the entire electric vehicle (EV) sector.

Source: Vitaliy Karimov / Shutterstock.com

What’s Happening With TLSA Stock

As turbulent as this week as been, TSLA stock looks ready to close it out on a high note. As of this writing, it is up 2% for the day and rallying after a slight downtick. It remains in the red for the week by 6.5% and by 22% for the month.

At first glance, it’s easy to attribute Tesla’s gains to positive market momentum, a reversal of the trend that has kept it down this week. However, a closer look reveals that such an intuition would likely be false. Fellow EV stock Lucid Motors (NASDAQ:LCID) is down 5.4% for the day. And while its peer Rivian (NASDAQ:RIVN) is indeed back in the green, it received a major catalyst today when an analyst prediction forecasted significant growth for the year ahead.

Why It Matters

Following the earnings call, CNN Business’ Chris Isidore sharply criticized Musk’s performance on the call, stating that it would have been better for TSLA stock if he had stuck to his promise. To his way of thinking, Musk’s admittance of the supply chain difficulties facing Tesla reflected poorly not just on his company but on the entire sector. While it is true that TSLA stock was down yesterday following the call, that doesn’t mean that the industry landscape is as bleak as Isidore paints. Let’s take a closer look.

Isidore’s chief criticisms seem to be that Musk admitted that the supply chain crisis had posed constraints for EV production. While it’s true that Musk may not have provided reassuring words for investors on that front in the manner that Wall Street saw from Apple (NASDAQ:AAPL) CEO Tim Cook, he did emphasize that the company was focused on growth, scaling and production in 2022.

It’s also not news that the supply chain problems have been inconvenient for automakers. Musk has tweeted about exactly that on multiple occasions. Yet so far, it hasn’t pushed TSLA stock down by any serious amounts. Industry experts have noted that even when supplies are limited, Tesla’s size gives it an advantage over smaller competitors.

Additionally, Isidore cited critical comments from WedBush Securities analyst Dan Ives. While Ives’ concerns were perfectly valid, he still maintains a buy rating and a $1,400 price target on TSLA stock. One of the call’s top takeaways should be that many analysts remain bullish on Tesla. In fact, since yesterday, more have joined the pack.

What It Means

The supply chain crisis hasn’t been good for any manufacturers. Tesla has certainly not been immune, but it weathered the storm last year and still exceeded expectations on deliveries for the final quarter of 2021. There’s no immediate reason to think that the company won’t continue to grow in 2022.

As it grows, so will TSLA stock. Yes, competition is rising, as Isidore noted, but Tesla remains the undisputed leader of the EV race. Musk has no wish to surrender that title, and he’s going to ensure that it doesn’t happen. The recent record-setting production statistics indicate that he won’t have much trouble.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Energy & Critical Metals

Is LCID Stock a Buy Right Now? Here’s What 3 Analysts Think About Lucid Price Predictions.

Shares of Lucid (NASDAQ:LCID) closed down 5.4% today, trading near their 2022 low. Even worse, shares of LCID stock are down more than 25% over the past…

Shares of Lucid (NASDAQ:LCID) closed down 5.4% today, trading near their 2022 low. Even worse, shares of LCID stock are down more than 25% over the past five trading days.

Source: Around the World Photos / Shutterstock.com

During 2021, LCID stock returned a staggering 280% as electric vehicle (EV) stocks entered the spotlight. In addition, Lucid has not reported any material news this year that would explain its price decline. So, why are shares down so much?

Tesla Reports Supply Chain Woes

Lucid’s recent price decline may be attributed to Tesla’s (NASDAQ:TSLA) fourth-quarter earnings. While Tesla reported sales that were up an impressive 65% year over year, the company also warned of “equipment capacity, operational efficiency and … supply chain” issues. TSLA stock dropped more than 10% the following day.

Tesla is the undisputed leader in the EV industry. It only makes sense that if Tesla is having issues, then those issues could translate to Lucid as well. Furthermore, Tesla reported that it was experiencing “parts constraints,” which factored into the EV maker announcing it would not release any new vehicles this year. This constraint could hurt Lucid as well. However, all will be known when Lucid reports earnings for the fourth quarter. Lucid has not confirmed an earnings date yet, although Nasdaq estimates that the date will fall on Feb. 21.

With the potential supply chain constraints in mind, investors are starting to doubt whether Lucid will be able to repeat last year’s performance. Let’s take a look at Wall Street’s LCID stock price predictions.

LCID Stock Price Predictions

  • Citi has a price target of $57. Analyst Itay Michaeli is bullish on Lucid for three reasons: its leading EV technology credentials, a fast speed t0 market, and “advanced and comprehensive sensor suite leveraged with OTA [over-the-air] capabilities.” Michaeli adds that he sees several catalysts for the coming year, including a manufacturing ramp, Air launch timing updates, and financial results.
  • Guggenheim has a price target of $38. Analyst Ali Faghri gives Lucid a “premium multiple” due to its “best-in-class EV technology,” vertical integration business model and its status as a powertrain supplier. Faghri adds that in the best-case scenario, shares of LCID stock could reach $83. In the worst-case scenario, Lucid could fall to as low as $12.
  • Morgan Stanley has a price target of $16. Lucid’s Q3 delivery figure impressed analyst Adam Jonas. Jonas estimates that Lucid will receive 15,000 reservations for 2022, which is lower than Lucid’s internal estimate of 20,000. For 2030, Jonas believes Lucid will receive 400,000 reservations, which is again lower than Lucid’s estimate of 500,000. Jonas highlights several company risks, such as scaling production, factory costs and supply chain issues. Finally, the analyst adds that he sees better risk-reward balances in other EV names, such as Tesla, General Motors (NYSE:GM) and Ferrari (NYSE:RACE).

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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GEVO Stock is a Risk-On Asset in a Risk-Off Market

I wrote about Gevo (NASDAQ:GEVO) in February 2021 when it was heading towards its meme-stock induced 52-week high. As a company that was, and remains,…

I wrote about Gevo (NASDAQ:GEVO) in February 2021 when it was heading towards its meme-stock induced 52-week high. As a company that was, and remains, a pre-revenue company, I made a bearish call on GEVO stock.

Source: Shutterstock

That proved to be the right call. Since February, GEVO stock went on a steady trip lower, but had seemed to find a solid level of support.  

However, since December 2021, GEVO stock has cut through that level of support and, as of this writing, sits at $3.50 a share. Realistically, it could go lower.

Now trading below $5, Gevo looks a bit more interesting. However, I have to caution you. This stock is only for speculative investors who have the time and patience to wait for the company to deliver revenue. 

A Bet on Renewable Fuels 

The elevator pitch for Gevo is certainly compelling.

The company is a play on renewable hydrocarbon products, specifically low-carbon liquid transportation fuels that will be sustainable alternatives to traditional fossil fuels.

The company’s process is to transform carbon into liquid hydrocarbons that have a potentially “net zero” GHG footprint. Gevo does this by using a combination of photosynthetic energy, wind energy and biogas energy.

And the company is focusing on three areas that would appear to have high demand. The first is sustainable aviation fuel. The electric vehicle (EV) movement is certainly ramping up, but whatever form that takes, it will be a long time before technology like that is ready for the aviation industry.

Gevo is also making inroads into two other areas: renewable gasoline for commercial fleets and regenerative agriculture that focuses on “growing feedstocks in ways that sequester carbon and improve the soil.”

Managing Revenue Expectations 

First the good news: if the company’s estimates are correct, revenue is on the way. In its December 2021 investor presentation (page 5), Gevo said it has approximately $3 billion in financeable contracts already in place. And the company is negotiating an additional $30 billion in contracts with what the company terms “high-quality” customers.

That’s bullish news. However, the commercial supply arrangements won’t begin until 2024. In the meantime, Gevo is taking steps to get its Net Zero projects constructed..

However, as our own Louis Navellier wrote late last year, Gevo does have $522.4 million in cash on hand. That should sustain the company until it begins to generate revenue. That would be welcome to investors who had become frustrated by share dilution from stock offerings.

However, I would be remiss if I didn’t share with you this reminder from Ian Bezek: “every year since 2012, Gevo’s gross margin has been negative. Consequently, it costs the company more to produce its fuels than it earns from selling them.”

With Friends Like These

I can’t blame investors for getting excited about the prospects for GEVO stock. After all, the presumption was that the Biden administration was going to make clean, renewable energy a priority. However, biofuels continue to have a complicated relationship with the rest of the renewable energy sector. 

In December, the Environmental Protection Agency (EPA) released its proposed Renewable Fuel Standard volumes for 2021 and 2022. Unfortunately, industry experts saw the move as “placing a feather on the renewable fuels pedal” precisely when the Biden administration is trying to push through bold action on climate change.

What to Do With GEVO Stock?

Purely based on its stock price, GEVO stock looks oversold. However, as I noted above whether that makes it a buy depends on your personal risk tolerance. At this point, you’re investing in a company with a business model of questionable sustainability. And in the current market environment that would be the definition of a risk-on asset.

Nevertheless, with the stock trading below $5, it might be worth a speculative investment as part of a clean energy portfolio.

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for eight years. He has been writing for InvestorPlace since 2019. 

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