The Liontown share price has tumbled 20% so far in June. What’s next?

Could the ASX lithium favourite have a 110% upside?

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A male lion with a large mane sits atop a rocky mountain outcrop surveying the view, representing the outlook for the Liontown share price in FY23

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Key points

  • The Liontown share price tumbled 19% during last week's lithium sell-off and it hasn't recovered yet 
  • However, Macquarie reportedly believes the market has factored a lithium price of just US$11,000 per tonne into the company's valuation 
  • It's expecting the lithium explorer and developer's stock to reach $2.50 in the future – representing a 110% upside on its current price 

This month has been disastrous for most ASX lithium shares, and the Liontown Resources Limited (ASX: LTR) share price hasn’t escaped the hardship.

The stock has tumbled 19.7% since the end of May amid a broader lithium sell-off. At the time of writing, the Liontown share price is $1.14.

Let’s take a look at what’s been weighing on the lithium explorer and developer this month and what the future could bring.

What’s going on with the Liontown share price?

The ‘lithium boom’ hit a hurdle last week, plunging the share prices of lithium stocks like Liontown into the red.

The stock cratered 19% last Wednesday amid a barrage of seemingly bad news for the future of ‘white gold’.

That day, reports Goldman Sachs was bearish on lithium prices hit headlines amid news Argentina had introduced a reference price for the commodity and that electric vehicle giant BYD planned to source its own lithium.

Goldman Sachs reportedly expects lithium prices to slump to U$16,372 a tonne next year. And plenty of other brokers also predict they’ll slow down in the coming months and years.

Though, that might already be priced into the company’s stock.

Macquarie reportedly expects lithium to trade for US$48,000 a tonne in 2023. It also believes the Liontown share price has factored in a lithium price of just US$11,000 a tonne, reports Livewire.

The broker has a $2.50 price target and an outperform rating on the company’s stock. That represents a 110% upside on Liontown’s current share price.

There’s also plenty of hope for the company’s future production. Tesla Inc (NASDAQ: TSLA) stepped in with a deal earlier this week that will see it snapping up 150,000 dry metric tonnes of spodumene concentrate each year from the company’s Kathleen Valley Lithium Project. Production at the project is expected to begin in 2024.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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