Why are Pilbara Minerals shares sinking 5% today?

Pilbara Minerals was well and truly out of form in the last quarter.

| More on:
A man holds his head in his hands, despairing at the bad result he's reading on his computer.

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

Pilbara Minerals Ltd (ASX: PLS) shares are tumbling on Thursday.

In early trade, the lithium miner's shares dropped over 5% to $3.68.

The Pilbara Minerals share price has recovered a touch since then but remains down 2.5% at the time of writing.

Why are Pilbara Minerals shares under pressure?

There was only likely to be one outcome for the company's shares this morning after it posted its quarterly update.

That update revealed that the lithium giant had fallen short of expectations for production, sales, and average realised price. In addition, its costs increased greater than what some analysts were expecting.

Here's a summary of how it performed compared to expectations:

  • Production was down 11% to 144,200 dry metric tonnes (dmt) of spodumene. Goldman Sachs was forecasting production of 150,000 dmt and the consensus estimate was 156,000 dmt.
  • Sales volumes fell 17% to 146,400 dmt of spodumene. Goldman was expecting sales volumes 148,000 dmt, whereas the consensus estimate was 162,000 dmt.
  • Pilbara Minerals reported an average realised price of US$2,240 per tonne, which was down 31% quarter on quarter. Goldman was forecasting US$2,433 per tonne and the market was expecting US$3,140 per tonne.
  • Finally, the company's costs came in 16% higher quarter on quarter at US$489 per tonne. Whereas Goldman Sachs was expecting a 10% lift over the previous quarter.

What else happened?

Also potentially weighing on Pilbara Minerals' shares was management commentary about near-term lithium prices. It said:

Demand for lithium raw materials is expected to remain consistent in Q2 FY24 which is typically a stronger period for EV sales. Market pricing for spodumene concentrate and lithium chemicals is however likely to continue to remain volatile in the near-term given uncertain macroeconomic conditions and closely managed inventories in the supply chain.

Following today's decline, Pilbara Minerals' shares are now down approximately 30% over the last 10 weeks.

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 positions in and has recommended Goldman Sachs Group. 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

woman holding two phones connected by lead
Materials Shares

Up 46% in one month! Pilbara Minerals shares lead the charge as lithium stocks rally

Are lithium stocks back in vogue?

Read more »

smiling worker stands before power generator technology
Materials Shares

Fortescue shares jump 5% on record performance

This mining giant was in fine form during the quarter.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »