Why has the Sayona Mining share price dumped 33% in 2 months?

Why are investors selling shares in Sayona Mining?

| More on:
A woman puts up her hands and looks confused while sitting at her computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Sayona Mining's share price has shredded a lot of its value over the last couple of months
  • This sell-off is in spite of the company reporting largely positive developments in its fundamentals
  • The most plausible explanation for the sell-off is that investors could be taking profits from their investments

The Sayona Mining Ltd (ASX: SYA) share price has dumped 33.78% of its value after reaching a high of 37 cents per share on 13 September.

Shares of the lithium producer closed Wednesday's trade at 24.5 cents.

The S&P/ASX 200 Materials Index (ASX: XMJ) was easily the best-performing sector indices today, finishing up 2.47%.

Let's cover some recent developments in Sayona's fundamentals to see if we can piece together why its shares have been sold off.

What's going on with Sayona shares?

Most recently, Sayona made the list as one of the top 10 most-shorted ASX shares with a short interest ratio of 8.9% when the article was published.

Some good news for the company came on 27 October, which is when the company released an update for its North American Lithium (NAL) operation in Quebec, Canada.

The update contained news that production at NAL will restart for the first quarter of 2023.

And then on 16 October, the Fool covered previous developments for Sayona. These included its pre-feasibility study for its Moblan Lithium Project, which is also located in Quebec.

Also, predicted price increases for lithium hydroxide and spodumene concentrate were anticipated to take hold in 2023 before levelling off and pulling back in 2024.

So, by most accounts, there has been nothing but good news to report on for Sayona. So why are its shares down by 33% in two months?

This question has been asked before. The most plausible explanation seems to be that investors have been selling shares to take profits from their investments. My colleague James noted this profit-taking at the start of October.

Sayona Mining share price snapshot

The Sayona Mining share price is up 88% year to date. That's beating the S&P/ASX 200 Index (ASX: XJO) by a wide margin, down 6% over the same period.

The company's market capitalisation is around $2.03 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

'I hate what I have done': Mineral Resources share price down as Ellison laments actions

Managing Director Chris Ellison says he deeply regrets the impact of his 'error of judgement'.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Materials Shares

Why is this ASX lithium stock jumping to a 52-week high today?

This lithium stock is smashing the market this year despite all the doom and gloom in the industry.

Read more »

Projection of two hands being shaken on a deal.
Materials Shares

Sayona Mining shares sink 13% on Piedmont Lithium merger news and capital raise

This merger will create the largest lithium producer in North America.

Read more »

Miner looking at a tablet.
Materials Shares

Down 28% in 2024, why this ASX 200 lithium stock could now be 'deeply undervalued'

The ASX 200 lithium stock has drawn plenty of investor attention over the past month.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Materials Shares

Buy BHP shares for a 20%+ return

Goldman Sachs expects big total returns from this mining giant.

Read more »

Miner looking at a tablet.
Materials Shares

Here's why ASX uranium shares are ripping higher today

Uranium shares are smashing the markets today.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Materials Shares

2 ASX 200 lithium stocks to buy for big returns

Which stocks are analysts tipping as buys right now? Let's find out.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Materials Shares

Is Mineral Resources stock a good buy right now?

This mining share is trading close to multi-year lows. Is this a buying opportunity? Let's find out.

Read more »