Five things to watch in markets in the week ahead
Investing.com - Lithium Americas Corp. (NYSE:LAC) stock surged more than 60% in after-hours trading Wednesday following reports that the U.S. government is negotiating for an equity stake in the company. The surge pushed the $1.39 billion market cap company to trade near its 52-week high, with the stock showing a strong 24.8% return over the past year.
The reported discussions are allegedly connected to the previously approved $2.26 billion Department of Energy loan to Lithium Americas, though TD Cowen notes these reports remain unsubstantiated. According to InvestingPro data, the company maintains a healthy financial position with more cash than debt and a robust current ratio of 9.88.
TD Cowen reiterated its Buy rating on Lithium Americas with a $5.00 price target amid the sharp price movement.
The investment firm indicated that while the headlines have driven significant investor interest, the tangible upside for Lithium Americas remains "less clear given committed offtake constraints."
TD Cowen added that if true, such an arrangement would improve confidence in long-term financing for the lithium producer, comparing the market reaction to recent outsized returns seen in stocks like Intel and MP Materials.
In other recent news, Lithium Americas Corp. is actively engaged in discussions with the U.S. Department of Energy (DOE) regarding the conditions of its $2.26 billion loan for the Thacker Pass lithium project. This development comes as the company collaborates with General Motors to meet certain prerequisites for accessing the loan. Additionally, reports have surfaced that the U.S. government is considering acquiring an equity stake in Lithium Americas, leading to a significant restructuring of the loan terms. The Trump administration is reportedly negotiating to secure up to a 10% stake in the company as part of these discussions. The Thacker Pass project, which is anticipated to be the largest lithium source in the Western Hemisphere, is a joint venture with General Motors and is expected to commence operations in 2028. Amid these developments, Jefferies has adjusted its price target for Lithium Americas to $7.00, citing concerns over the DOE loan re-evaluation. Despite the price target reduction, Jefferies maintains a Buy rating on the stock. These ongoing negotiations and potential government involvement highlight the strategic importance of the Thacker Pass project in the context of U.S. domestic mineral production.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.