The Pilbara Minerals Ltd (ASX: PLS) share price sunk to a year-to-date low of $2.19 earlier this month.
A report from Goldman Sachs stating that lithium prices are overvalued has led to negative sentiment across the lithium sector.
In addition, reports that Warren Buffett-backed electric vehicle company BYD is planning to buy six lithium mines in Africa could have weighed on lithium shares recently.
This didn't help Pilbara Mineral shares, which have now fallen almost 23% in 2022.
Similarly, Liontown Resources Limited (ASX: LTR) and Vulcan Energy Resources Ltd (ASX: VUL) shares have also tumbled this year. They are down 27% and 31%, respectively.
However, despite the news weighing down most lithium stocks, not all companies have backtracked in 2022.
In fact, Core Lithium Ltd (ASX: CXO) shares are up 119% while the Allkem Ltd (ASX: AKE) share price has risen 14%.
When looking at the broader market, the S&P/ASX 200 Materials Index (ASX: XMJ) is up 7% this year to date, while the S&P/ASX 200 Index (ASX: XJO) has lost almost 4% over the same period.
At the time of writing, Pilbara Minerals shares are swapping hands for $2.45, a gain of 0.8% on the day.
What's dragging Pilbara shares lower?
There are a couple of additional reasons why the Pilbara share price may have cooled off.
First and foremost, the spot price for lithium carbonate has travelled sideways since its lofty highs in February. This comes after the crucial battery-making ingredient hit a record high of almost 500,000 Chinese yuan (A$104,644) per tonne.
Currently, the lithium carbonate price is fetching 486,500 Chinese yuan (A$101,814) per tonne.
The COVID-19 crisis in China affected demand projections with 'new energy' passenger vehicles dropping 40% when compared to March.
Nonetheless, with China's COVID-19 crisis now under control, electric vehicle manufacturers are expected to return to normal capacity.
Furthermore, a number of brokers have weighed in on the Pilbara Minerals share price in the past month.
Analysts at Barrenjoey initiated an underweight outlook on the lithium miner's shares but placed an attractive $3 price target.
This implies an upside of roughly 22% from where Pilbara Minerals shares trade today.
The team at Credit Suisse also gave their take, downgrading their view to neutral from outperform.
The broker cut its rating on Pilbara Minerals shares by 19% to $3 per share.
About the Pilbara Minerals share price
Despite its recent slump, the Pilbara Minerals share price has soared more than 80% over the last 12 months.
The company's shares registered an all-time high of $3.89 earlier this year before treading lower.
Based on today's price, Pilbara Minerals commands a market capitalisation of roughly $7.29 billion.
