Lithium Americas skyrocketed Wednesday on reports that the Trump administration is seeking an equity stake of as much as 10%, the latest push toward state capitalism.
Reuters reported late Tuesday that President Donald Trump and his administration are looking to build a substantial stake in Lithium Americas as it renegotiates terms of the company's $2.26 billion Energy Department loan for its Thacker Pass lithium project.
The company's Thacker Pass lithium project is a joint venture with General Motors, which has invested $625 million in the project good for a 38% stake.
In response to the report, Lithium Americas commented to the media that it would provide an update at the appropriate time and that discussion with the DOE and GM are ongoing.
Trump Has Taken Stakes In Intel, MP Materials
The Trump administration has recently taken stakes in Intel and MP Materials as it continues to stress the importance of taking some control of companies and sectors it deems as integral to national security interests.
Intel stock surged more than 20% on Sept. 18 after news broke of the Trump administration's stake.
Meanwhile, MP Materials stock ballooned 50% on July 10 as the Department of Defense took a 15% stake in the rare earths firm. The Pentagon also agreed to buy neodymium-praseodymium oxide from MP for the next decade at a floor price of $110 per kilogram. The compound is key for permanent magnets for electric vehicles, wind turbines and robotics.
Both moves may have spurred other investment. Nvidia announced a partnership to invest $5 billion investment in Intel. Additionally, JPMorgan Chase and Apple have agreed to provide financing for various MP projects.
Now, the Trump White House appears to be looking to shore up lithium with a 10% stake in Lithium Americas.
Trump Impact On Lithium Americas Stock
Lithium Americas stock soared nearly 100% to 6.01 during Wednesday's stock market after falling 7% to 3.07 on Tuesday. The move on Wednesday sees LAC hitting a 52-week high, but it is still well below an all-time high of 12.38 from October 2023.
JPMorgan analysts on Wednesday wrote that the it views the LAC rally as "overblown." The firm noted that it is difficult to quantify what fair value a 10% government stake should be valued at "amid unanswered questions such as what, if any, revised offtake agreement(s) could look like."
JPMorgan has a neutral rating on Lithium Americas.
Meanwhile, Jefferies analyst Laurence Alexander on Wednesday lowered his price target on Lithium Americas to 7 from 8 and kept a buy rating on the stock after the Reuters report.
General Motors stock rose 2.3% on Wednesday, nearing the top of a five-weeks-tight pattern that could be viewed as another handle on a base going back to last November.
Lithium giant Albemarle, which has some U.S. projects, gained about 2% in Wednesday's stock market.
Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
The lithium stock has a 65 Composite Rating out of a best-possible 99. Lithium Americas also has a 70 Relative Strength Rating and a 51 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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