Lithium Universe (ASX: LU7) shares are up 22% on their relisting. LU7 shares are an interesting opportunity although they’re still clearly highly speculative. Everything is about how great the team is and they’re going to go looking. Sure, they might well find something too, they’re looking in likely places and they’re upgrading the tech they’re using to look as well. The chair has long experience of the lithium market - a rarity given that the market sector was tiny until a decade ago. We would, ourselves, perhaps have emphasised the experience of Sons of Gwalia and Greenbushes a little less as they did go bust but still, experience is experience.
As we say, it’s an interesting idea. It’s possible to think that a $25 million capitalisation is a little much at this stage of the game. They’ve some claims and an experienced team. Which is nice but perhaps not quite fully justifying that valuation. They’re going to use AI which is a nice addition of current buzzword excitement to the other, that mention of “lithium”. They’ve a web presentation which includes this deathless line: “After a 10 year hiatus, a new lithium company emerges from the galaxy” and we’re not sure quite what to do with that other than giggle.
But we can’t help but hear an echo of an old, old, stock market story here. One thing is that the stock is actually advertised on the stock market reporting pages themselves - that strikes us as a tiny bit odd. And yes, we do know that the use of a shell to get to market is common enough. An old company that used to do something else is now defunct except for the quote itself, a new business inserts itself and off we go again.
Lithium Universe share price from Google Finance
Yet still: “Lithium Universe Limited (LU7, formerly Mogul Games Group Ltd) is a games, esports media and software business. Lithium owns and operates the mogul.gg tournament platform - advanced pure-play online esports tournament and matchmaking platform with automation for esports titles.”
There’s an old story about Joe Kennedy (father of Jack, Bobby and Ted etc). Joe was a stock market speculator and back at the end of the 20s he found that his shoeshine boy was discussing which stocks to buy. At which point he realised that there was no possibility at all of new money coming into the market - everyone in the country was clearly already here. So, he sold out - in the months leading up to the 1929 crash. Now, this is only an echo and again, we repeat, we know about the use of shell companies to gain a listing. And yet the esports business going lithium mining - when is the top of that lithium exploration market then?
True, we’ve been insisting for some time that it can’t be far off. Which is perhaps why this story resonates with us now. But the important point that we insist is true - that lithium market is going to peak, it’s only a matter of when.
