Core Lithium Ltd (ASX: CXO) shares are among the most divisive on the Australian share market.
There are some investors that believe the lithium miner's shares are great value and there are others that feel its shares are vastly overvalued.
A testament to the latter is that Core Lithium is one of the most shorted shares on the Australian share market.
As covered here at the start of the week, Core Lithium had a sizeable 9.7% of its shares held short.
To put that into context, with a market capitalisation of approximately $1.9 billion, that means that almost $200 million of investor funds is betting on its shares tumbling deep into the red.
And while short sellers don't always get it right, they rarely bet so big on a share price declining if there isn't some substance behind their view.
The bull side of the equation
It is worth noting that analysts at Macquarie don't agree with short sellers. In fact, the broker appears to believe that Core Lithium shares are great value at the current level.
According to a note from last month, the broker has retained its overweight rating and $1.30 price target on the lithium miner's shares.
This implies potential upside of 30% for investors over the next 12 months.
What is fair value?
Fair value is difficult to ascertain given the mixed views on the company.
However, most lithium miners are trading at a discount to their net asset value (NAV). Whereas the Core Lithium share price has been trading at a material premium to its NAV.
For example, in April Citi highlighted that "CXO trades on ~1.3x P/NAV vs peers on ~0.8-0.9x P/NAV." It is for this reason that Citi feels that fair value is 75 cents for the company's shares.
Its true fair value is probably somewhere in the middle of Citi's and Macquarie's estimates. Though, where lithium prices go from here could have a big say in things. If they strengthen, its shares could gravitate towards Macquarie's valuation. But if they weaken, don't be surprised if they slide towards Citi's valuation.