The Core Lithium Ltd (ASX: CXO) share price was once the envy of many S&P/ASX 200 Index (ASX: XJO) materials investors. The stock leapt 73% over the course of 2022.
However, recent months have taken their toll. The Core Lithium share price has fallen 11% year to date and is currently trading 26% lower than it was this time last year.
Right now, stock in the lithium hopeful-turned-producer is swapping hands for 92 cents a share.
And I don't believe the ASX 200 share is out of the woods. Here are three things I think have the potential to send the stock lower.
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3 things that could tank the Core Lithium share price
Lithium prices
Of course, the big risk to most lithium miners and hopefuls concerns the value of the battery-making material.
Since Core Lithium mainly relies on selling lithium products for income, its earnings are reliant on the commodity's value.
If the price of lithium were to fall substantially, it would probably take the company's future earnings – and likely its share price – with it.
Though eToro market analyst Josh Gilbert notes the company is braced to withstand lower prices, my Fool colleague Tony reports.
Exploration
Core Lithium kicked off spodumene concentrate production at its Finniss Lithium this year with ore mined from the operation's Grants pit.
It's also planning a second mine at the BP33 deposit and is exploring the Hang Gong deposit, as well as the Far West and Bilatos prospects. And, so far, such exploration appears to be going well.
However, active exploration brings about notable risks for a company's share price. Particularly, if future findings fail to meet the market's expectations.
Short interest and market sentiment
The final factor I think has the potential to tank the Core Lithium share price is a swing in market sentiment.
The company is already among the ASX's most shorted, with a short interest of 9.58% at last count. That means many market participants are effectively betting against the stock.
As I recently covered, rising short interest isn't necessarily a red flag. However, it can be an indication of falling market sentiment.
Meanwhile, the ASX 200 company is yet to turn a profit. That means its $1.67 billion valuation is largely based on future expectations.
Thus, a swing in market sentiment away from lithium stocks in general, or Core Lithium in particular, could prove dire for its valuation.
