Why did 2022 bring such huge highs and lows for Pilbara Minerals shares?

It certainly was an eventful year for Pilbara Minerals Ltd (ASX: PLS) shares.

As you can see on the chart below, the lithium miner's shares traded as high as $5.66 before finishing the year at $3.77.

While this still meant that Pilbara Minerals shares ended the year with a 17% gain, it could have been so much better for shareholders.

What happened to Pilbara Minerals shares in 2022?

Investors were scrambling to buy the lithium giant's shares last year due to its strong performance in FY 2022.

Thanks to sky high lithium prices, Pilbara Minerals reported a 577% increase in revenue to $1.2 billion and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $814.5 million. The latter was up massively from just $21.4 million in FY 2021.

And with Pilbara Minerals' online lithium auctions continuing to command higher and higher prices for much of the year, investors were betting on another stellar result in FY 2023.

Furthermore, management revealed that it would pay its maiden dividend in 2023, much to the delight of shareholders.

However, a couple of bearish broker notes late in the year claiming that lithium prices could soon collapse caused investors to panic.

The selling then intensified after Pilbara Minerals released a digital auction result in December which revealed a month on month decline in the price commanded for its lithium on the platform. This sparked fears that these analysts were on the money and lithium prices were on the verge of plummeting.

What's next?

Opinion remains divided on where Pilbara Minerals shares are heading in 2023.

The team at Macquarie remain positive and expect lithium prices to stay strong. As a result, the broker has put an outperform rating and $7.50 price target on its shares. This suggests that its shares could double in 2023.

Whereas Credit Suisse has an underperform rating and lowly $2.60 price target on its shares. This implies potential downside of 30% for investors from current levels.

Time will tell which broker made the right call.