Here's why the Lake Resources share price has plunged 13% in 3 days

This lithium share just won't stop falling it seem

| More on:
A woman holds her hands to the side of her face as she sits back in shock at something she is reading or seeing on her computer screen.

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

The Lake Resources N.L. (ASX: LKE) share price came under pressure again on Tuesday.

The embattled lithium developer's shares were down as much as 5% to 19.2 cents at one stage.

When the Lake Resources share price hit that level, it meant it had lost 13% of its value over the last three trading sessions.

Why is the Lake Resources share price tumbling again?

There are a couple of potential reasons for this weakness. The first is a continuation of the downward trend we have seen over the last 12 months.

Things have been so bad for the lithium developer that its shares are now down a whopping 82% since this time last year.

Based on recent updates regarding its production plans and cost expectations, the market appears to seriously doubt whether its Kachi operation in Argentina is viable.

Management estimates that its phase one plan has a capital cost of US$1.1 billion to US$1.5 billion. This compares to its previous estimate of US$544 million.

So, with a market capitalisation under $300 million, Lake is going to have to raise upwards of five times its current valuation to get the project operating.

What else?

Also weighing on the Lake Resources share price was news that the company has been kicked out of the ASX 200 index at the quarterly rebalance.

Though, this shouldn't have come as a surprise to investors given its fall from grace and low market capitalisation.

One group of investors that will be celebrating these declines is short sellers. As one of the most shorted shares on the ASX, Lake Resources has delivered big returns to those shorting it.

And with its short interest still sky high, they don't appear to believe this is where the declines stop.

Should you invest $1,000 in Australian Foundation Investment Company Limited right now?

Before you buy Australian Foundation Investment Company Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Australian Foundation Investment Company Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro 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

Three miners looking at a tablet.
Materials Shares

Buy Rio Tinto shares for a 23% return

Let's see which broker is tipping this mining giant as a top buy.

Read more »

A bricklayer peers over the top of a brick wall he is laying with a level measuring tool on top and looks critically at the work he is carrying out.
Materials Shares

Brickworks shares have surged 15% in a month. Are they still good value according to Macquarie?

Here's what this broker has to say about the stock.

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Are Pilbara Minerals shares too cheap to ignore?

A leading broker has given its verdict on this beaten down lithium miner.

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Materials Shares

Does Macquarie rate James Hardie shares a buy, hold or sell?

The company is set to report FY25 earnings this week.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

Why is the Core Lithium share price jumping 19% today?

Something is getting investors excited. Let's find out what it is.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Financial Shares

Which is better value right now, Soul Patts or Brickworks shares?

Let's dive in and see what the experts have to say.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Materials Shares

Core Lithium shares charge higher on big news

This lithium miner is starting the week strongly. But why?

Read more »

Lion roaring in the wild, symbolising a rising Liontown share price.
Materials Shares

Why did the Liontown share price rip 19% higher today?

This ASX lithium share was the fastest riser of the ASX 200 today.

Read more »