LIT: Oversupply And Slowing EV Adoption Disappoint

Multiplo Invest
1.44K Followers

Summary

  • I recommend selling the Global X Lithium & Battery Tech ETF due to poor 5-year returns and disappointing lithium sector fundamentals.
  • Lithium prices have plummeted 89% since 2022, driven by oversupply and slower-than-expected EV adoption, undermining the ETF’s investment case.
  • Valuation remains unattractive despite weak sector prospects and downward revisions in EV growth forecasts.
  • Current market conditions do not support a compelling investment; I believe investors should wait for clear demand improvement before considering LIT again.

aerial view of Silver Peak Lithium Mine, Nevada

NNehring/iStock via Getty Images

Investment Thesis

I recommend selling the Global X Lithium & Battery Tech ETF (NYSEARCA:LIT). Over the past 5 years, this ETF has returned less than 15%, despite investors' strong expectations for lithium's applications in energy transition, batteries, and autonomous vehicles.

This article was written by

1.44K Followers
More than 5 years of experience in equity analysis in LatAm. We provide our clients with in-depth research and insights to help them make informed investment decisions.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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