Why Standard Lithium Stock Soared Today

Source The Motley Fool

Lithium mining start-up Standard Lithium (NYSEMKT: SLI), which (six months after I last wrote about it) still isn't actually producing any lithium at all, is nonetheless enjoying a banner day on the stock market Tuesday, its shares up 7.8% through 10:10 a.m. ET. And why?

Standard Lithium could soon turn into a real lithium company.

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Standard Lithium's big news day

In an 8-K filing with the SEC this morning (containing a press release apparently issued yesterday), Standard Lithium announced that the South West Arkansas project (SWA) of its Smackover Lithium joint venture with Norwegian energy concern Equinor ASA has been designated a "priority transparency critical mineral project" under President Trump's Executive Order 14241 on "Immediate Measures to Increase American Mineral Production."

That's quite a mouthful. Here's what it means, though, according to Standard Lithium: "Support from the White House signals strong federal backing for the project, reinforcing its role in reducing U.S. reliance on China." It also makes SWA one of only three domestic lithium projects in the U.S. receiving Department of Energy support.

Is Standard Lithium stock a buy?

It remains to be seen if this support will be of the financial or merely moral variety, however, and for the time being investors should probably presume the latter. That probably means investors should anticipate significant capital expenditures on Standard Lithium's part as the company continues to develop itself from its start-up phase and move toward actual lithium-producing operations.

How long will that take, though? No one seems to know. None of the analysts polled by S&P Global Market Intelligence are willing to even hazard a guess as to when Standard Lithium will begin producing revenue, much less profit -- other than to say that neither revenue nor profit can be expected before 2027.

Long story short, today's news is a positive development for Standard Lithium, but not one to bet the ranch on. This start-up remains a speculative stock and should be treated as such.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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