Albemarle Corporation (NYSE: ALB) shares plunged in their worst day of trading ever on Thursday, dragging down clean energy technology-related exchange traded funds in the process.
Albemarle, the world’s largest lithium miner, suffered its single worst day ever after profit forecasts disappointed investors who were expecting a bigger payday from record-high prices of the rare earth component used in electric batteries, Bloomberg reports. The company’s shares plummeted 18.6%.
While company on Wednesday hiked its 2022 outlook for earnings per share to $5.65 to $6.65, it was still “surprisingly low,” Aleksey Yefremov, senior analyst of U.S. chemicals at KeyBanc Capital Markets, told Bloomberg. Investors “were hoping it’d be a blowout because the spot lithium prices are so high.”
Lithium, a key component in electric battery-powered vehicles, began 2022 with a price surge due to near-term risks threatening shortages while demand accelerates on the clean initiative outlook and electric vehicle sales. The tight market is being hampered by disruptions from plant maintenance and the Winter Olympics in China, along with ongoing COVID-19 pandemic-related labor problems in Australia.
To put the outlook in perspective, Yefremov projected the company’s lithium business to show an Ebitda of 89%, which he argued was conservative. In reality, the company provided a guidance of 65% to 85%.
Albemarle raised its lithium-demand outlook over 30% to 1.5 million tons by 2025, and projected demand of over 3 million tons by 2030, CEO Kent Masters said during an earnings call.
“EV sales growth is accelerating as consumers become more energy conscious, governments incentivize clean energy, technology improves and EVs approach pricing parity with internal combustion vehicles,” Masters said on the call to analysts.
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