One of the biggest questions for stock markets this year is whether ASX lithium stocks can recover from an awful 2023.
As economies struggled both in the west and China, demand for the battery material dropped, sending both the commodity price and share prices spiralling down.
Moomoo Australia chief market strategist Matt Wilson recalled that there were brokers who had warned about this 12 months ago.
"These forecasts largely came to fruition, with the price of lithium carbonate falling by 73% to November 23."
Sayona Mining Ltd (ASX: SYA) was no exception to this malaise, as it shed a shocking 79% off its valuation over the past 12 months.
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Long-term outlook for lithium is bullish
The bright side for the lithium industry is that the world will continue to seek to reduce carbon emissions.
One of the main ways this will be done will be through the electrification of devices that are currently using fossil fuels, such as cars.
And that's why most experts are tipping demand for lithium will recover in the long run.
Wilson pointed to the corporate frenzy seen over the past six months as evidence that the mineral has a bullish future.
"Strong takeover activity in the sector suggests global mining companies are still believers in the longer-term theme and are positioning themselves for an increasing commitment to the sector."
But what about Sayona Mining specifically?
Do Sayona shares have the capability to double in 2024?
But can Sayona shares double in the short term?
Firstly, it seems professional investors are bullish on Sayona.
According to CMC Invest, all three analysts that cover the stock are rating it as a strong buy right now.
However, whether Sayona shares can double just in 2024 is highly — or even entirely — dependent on which direction lithium prices go.
Earlier this month The Motley Fool's Mitchell Lawler pointed out right now Sayona's mines are producing lithium at a razor-thin margin of 2.8%.
So if the global commodity price falls any further, it could become uneconomic to continue mining.
Fellow junior miner Core Lithium Ltd (ASX: CXO) has already been forced to pause production, sending investors running like it was a burning building.
Another point of interest is that Sayona is one of the most shorted stocks on the ASX at the moment.
According to the Australian Securities and Investments Commission, almost 10% of Sayona shares are currently lent out to short sellers.
While on face value this cancels out the bullishness of the three analysts, even if Sayona's valuation even creeps up a tiny amount, it could snowball into something spectacular.
In a classic short squeeze, all those short sellers would be forced to buy up the miner's shares to cover their positions. And that in itself accelerates the price upwards even further.
