Lake Resources N.L. (ASX: LKE) shares have been on a steep downward trajectory over the last 12 months.
As you can see below, the lithium developer's shares have lost a whopping 65% of their value.
Concerns over the viability of its lithium DLE technology, funding, a scathing short seller attack, and falling lithium prices have been to blame.
One thing that certainly could change this trajectory is profit. When a company goes from developing to actually generating cash, perceptions can change quickly and a share price can take off.
But when might Lake Resources become profitable? Let's take a look.
Profit forecast
Firstly, let's take a quick look at where the company is in respect to its quest to start selling lithium.
Lake Resources' most recent announcement revealed a big step forward towards this goal.
That announcement was the production of 2,500kg of lithium carbonate equivalents (LCE) from the pilot plant of the Kachi Project in Argentina.
This milestone means the project is on track to move from its pilot phase into commercial-scale development, which will make it the first lithium brine project in South America to produce lithium at commercial scale without the use of evaporation ponds for lithium concentration.
With that in mind, according to a note out of Bell Potter, its analysts are forecasting Lake Resources to make another small loss in FY 2023 of $13 million.
But then things will start to heat up, which could be good news for Lake Resources shares. Bell Potter is expecting the company to be almost profitable in FY 2024, with a loss of just $2.1 million forecast.
Then in FY 2025, the broker is forecasting a swing to a $30 million profit. This is expected to result in earnings per share of 1.8 cents.
Based on this estimate, Lake Resources shares trade at 28x FY 2025 earnings.
Should you buy Lake Resources shares?
While they are certainly high up on the risk scale, Bell Potter sees huge potential returns from Lake Resources shares with its speculative buy rating and $2.52 price target.
This implies potential upside of almost 400% over the next 12 months. Time will tell if it ever gets there, though.
