Why did the Core Lithium share price plunge 31% in June?

Let’s analyse and find out.

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Key points

  • It wasn't a good month for most ASX 200 shares in June 
  • The ASX 200 went backwards by 8.9% last month 
  • But it was an even worse month for Core Lithium, which plunged by more than 30% 

As most investors would be painfully aware of, June was not a pleasing month for ASX shares or for investors. Over the month just passed, the S&P/ASX 200 Index (ASX: XJO) fell by a nasty 8.9%. But the Core Lithium Ltd (ASX: CXO ) share price had a far worse time of it. 

Core Lithium shares were priced at $1.40 going into June. But coming out of June last week, this ASX 200 lithium stock was asking just 96 cents a share. That means the Core Lithium share price fell by a whopping 31.43% over the month. Ouch.

But it wasn’t just Core Lithium shares feeling the pain over June. We saw similarly large falls amongst many of Core Lithium’s peers, including Pilbara Minerals Ltd (ASX: PLS)Liontown Resources Limited (ASX: LTR) and Lake Resources N.L. (ASX: LKE).

So what on earth went wrong for this formerly high-flying company, Core Lithium?

Why did the Core Lithium share price plunge by 31% in June?

Well, we didn’t hear much out of the company itself over June. However, the entire ASX lithium space obviously did come under a lot of pressure last month.

It arguably started with the bearish note out from ASX broker Goldman Sachs at the start of June. As was well covered at the time, Goldman outlined a view describing the bull market in lithium and other battery metals as “over for now”. It predicted that lithium prices would drop to US$16,400 per tonne by 2023, down from the US$70,000-plus levels we see today.

In addition, June also saw share markets around the world take a tumble, which includes the ASX 200’s 8.9% drop. Fears over inflation, rising interest rates and a possible recession seem to be responsible for this loss of investor confidence.

In such an environment, lithium shares were always going to struggle, as investors typically view this space as amongst the riskier end of the ASX 200. 

So it’s likely that these two factors were responsible for the miserly performance of the Core Lithium share price over June. No doubt investors will be hoping for a better July. 

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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