It certainly hasn't been a great start to 2017 for the Orocobre Limited (ASX: ORE) share price.
In 2016 its share price more than doubled in value, but following a sharp decline yesterday the lithium miner's share price has now lost almost a third of its value year-to-date.
Yesterday's decline came after management shocked investors with a surprise revision to its full-year production guidance.
Due to inventory management requirements, production guidance has been revised down to between 12,000 and 12,500 tonnes of lithium carbonate. Previous guidance was for 15,000 tonnes of lithium carbonate.
Management is restricting its second-half production to between 5,500 and 6,000 tonnes in order to allow the desired grade and inventory profile to be achieved.
Whilst this is a big disappointment, the company does plan a significant production increase in the first-half. Guidance for FY 2018 will be provided in due course.
Should you invest following the sell-off?
Although a significant increase in production next year would be great news, the market is right to be sceptical following the recent downgrade.
So for now I would resist the temptation of snapping up its shares at the current share price and hold out until management provides updated guidance.
In the meantime investors might be better served with an investment in fellow lithium miner Galaxy Resources Limited (ASX: GXY). I believe this is the pick of the industry and a great way to get exposure to the lithium boom.
But as it is a high risk investment I would suggest investors limit their position to just a small part of their portfolio.
