Atlas Lithium (NASDAQ: ATLX) is down some 58% off its recent high. The stock was soaring on the basis of hopes over its lithium property in Brazil plus a royalty sale. Then came a short selling report claiming that it was all hype, a classic pump and dump in fact. We do not claim to know whether the short seller is correct or not. We have, elsewhere, expressed the thought that Atlas was built on much more hope than might be wise.
Lithium is, of course, the new gold mine of our times. The electric vehicle evolution is going to mean massive demand for it therefore every mine is hugely valuable. Right? This isn't necessarily true. There's no shortage of lithium out there (as Tesla's Elon Musk has been known to point out), only a shortage of currently operating lithium mines. Which means that while current producers might be valuable - they are - then future prospects might well not be. For they might come to market as many others do and lithium prices thus come down off their highs. But such market conditions are fertile ground for hopes and dreams to influence pricing - and for the less scrupulous to play on such hopes and dreams.
Atlas Lithium stock price from NASDAQOur considered opinion is that Atlas is a very early stage project which hasn't proven very much as yet. It should be valued on that basis. There's no certainty there's an economic amount of lithium there as yet - just as one example. The lithium royalty sale (which happened after that analysis) is the investor building a wide portfolio in the same manner as an Angel Investor in internet startups - a wide portfolio at a high level of risk.
Bleecker Street Research is more forceful. There the claim is that the entirety is a pump and dump. Keep telling nice stories to boost the stock price in order to be able to sell out at a higher price. We don't have an opinion on that claim. We agree that it is possible that it is true but we most certainly don't say that it is true.
The strongest we'd be willing to say is that given the early stage of work at Atlas Lithium the price got well ahead of itself. That is, even if all claims by the company were entirely true we still considered it over-valued. Whether it still is now - well, that depends upon how correct Bleecker Street is.
