ASX 200 lithium shares had a dream run over 2021 and 2022 as commodity prices soared in line with the rapidly rising global uptake of electric vehicles (EVs).
The price of lithium carbonate went from about US$5,800 per tonne in late 2020 to US$86,000 per tonne in November 2022. But then the party was over, with lithium tumbling since then to US$35,500 today.
Over this time frame, pretty much all ASX 200 lithium shares have done well. But one more so than all the others. In fact, it became a 10-bagger in just two short years.
A 10-bagger is a company whose share price has grown in value 10 times over.
And, the future of this particular lithium stock is still looking bright after the company officially transitioned from being an explorer (when all you do is spend money) to a producer (when you actually start selling your product and generating revenue) just a few months ago.
The 10-bagger ASX 200 lithium share is…
Core Lithium Ltd (ASX: CXO).
The Core Lithium share price has gone from 8 cents on 4 December 2020 to 87 cents today.
So, the lithium stock is now worth more than 10 times its value just over two years ago.
It's a 990% gain if you prefer percentage terms.
Let's compare this performance with other ASX 200 lithium shares over the same time frame.
- Pilbara Minerals Ltd (ASX: PLS) share price up 462% from 71 cents then to $3.99 now
- Allkem Ltd (ASX: AKE) share price up 204% from $3.97 then to $12.08 now
- IGO Ltd (ASX: IGO) share price up 153% from $5.04 then to $12.79 now
- Mineral Resources Ltd (ASX: MIN) share price up 133% from $34.56 then to $80.79 now.
Core Lithium has actually traded at a much higher price than where it is today.
The Core Lithium share price hit a peak of $1.88 in November 2022.
So, at that point Core Lithium had achieved a 2,250% gain in less than two years. And it still hadn't made a cent from lithium sales yet!
The dubious prize of the most shorted lithium share
Could this gigantic gain explain why Core Lithium is the most shorted ASX 200 lithium share today?
From the data above, we can see some disproportionate market exuberance over ASX 200 lithium shares compared to its peers.
To clarify, short selling is where professional traders try to profit from a fall in the share price. They borrow the shares and sell them with the intention of buying them back later, when they fall, to make a profit.
About 10% of Core Lithium's outstanding shares are currently shorted.
This is up from 1.7% this time last year when the stock was trading lower than where it is today — in the low 80-cent range.
So why do the pros think this ASX 200 lithium share is overvalued?
Where is Core Lithium at in its development?
Core Lithium is a small-cap ASX 200 lithium share with a market capitalisation of $1.6 billion.
In its 1H FY23 results released this month, Core Lithium reported a $9.2 million loss.
The company sent its first shipment of lithium — worth about $20 million — to China in January. This was Core Lithium's first revenue event.
As my Fool colleague Brooke recovered, the company achieved its first spodumene concentrate production in late February.
In early March, drilling results led to a more than doubling of the mineral resource estimate at the BP33 deposit within the broader flagship Finniss Lithium Project.
Then came a milestone sales agreement last week.
What do the experts say about the Core Lithium share price?
Well, earlier this month, Macquarie was optimistic on the Core Lithium share price. It maintained an outperform rating on the ASX 200 lithium share with an upgraded 12-month price target of $1.50.
The price target upgrade came after Core Lithium upgraded its resource estimate for Finniss.
Goldman Sachs retained its sell rating and a 90-cent share price target following the same news.
It said BP33's upgrade only boosted the Finniss project's total mineral resource estimate by between 20% to 30%. It also noted that more than half of the extra resources are more than 400 metres deep.
The broker said:
A significant increase to the updated resource base remains required to underpin fundamental valuation, in our view, where new developments are unlikely to come online in time to benefit from the current pricing environment.
