Lake Resources share price gives back some of yesterday's mystery 24% gains

Lake Resources shares are in the red on Friday.

| More on:
A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Lake Resources N.L. (ASX: LKE) share price is down 4.76% to 20 cents on Friday.

This follows a mystery 24% gain for the ASX lithium share yesterday despite no news from the company.

What's going on with the Lake Resources share price?

Well it's volatile, that's for sure!

At yesterday's intraday peak of 22 cents, Lake Resources shares were up by 35% from their Wednesday close of 16.5 cents.

Other lithium stocks delivered a mixed performance yesterday, so the cause of the spike in the Lake Resources share price remains unclear — but we canvas some possibilities below.

There is no news from the company today.

The only news yesterday was an announcement that Lake Resources would deliver a presentation at the XII International Seminar on Lithium in the South American Region in Argentina.

The presentation has not been lodged with the ASX at the time of writing.

Possible reasons for yesterday's share price spike

As stated earlier, on Wednesday afternoon the Lake Resources share price closed at 16.5 cents.

That was the lowest point it had traded at since early 2021, as shown in the chart above.

Back then, the lithium share was on a strong upwards trajectory to an all-time high of $2.65 in April 2022.

So, what could be happening is that short sellers are buying the lithium share to close their positions.

Shorting is a trading strategy generally only available to pro traders. It allows them to place a bet that a share price is going to fall.

As we reported recently, some short sellers have been closing their positions on Lake Resources recently.

The latest short position report from the Australian Securities and Investments Commission (ASIC) reveals 7.2% of Lake Resources shares are currently shorted. This compares to 9.09% two months ago.

Shorting dipped even lower to 6.34% in July, however, this was before Lake Resources disappointed the market with forecasts for lower production and higher costs.

There's also the possibility that (very) patient investors may be jumping into Lake Resources while it's at rock bottom lows, and this speculative buying may have contributed to yesterday's surge.

Motley Fool contributor Bronwyn Allen 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.

More on Materials Shares

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.
Materials Shares

Why did the Core Lithium share price just hit a 2-year low?

Top broker Goldman Sachs says falling lithium commodity prices may hit Core Lithium particularly hard.

Read more »

A cute little boy, short in height, wearing glasses, old-fashioned bow tie and cardigan stands against a wall near a tape measure with his hand at the top of his head as though to measure his height.
Broker Notes

Are ASX short sellers right about Pilbara Minerals shares?

Let's see what some of the big brokers think.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

What are brokers saying about the BHP share price?

This mining giant's shares are having a strong month. Can the run continue?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Which ASX lithium stock has soared 246% in just a month?

IPO investors are rubbing their hands in delight.

Read more »

Three miners stand together at a mine site studying documents with equipment in the background
Materials Shares

What is the outlook for ASX lithium shares in 2024?

How are things looking for these miners?

Read more »

a miniature moulded model of a man bent over with a pick working stands behind a sign that has lithium's scientific abbreviation 'Li' with the word lithium underneath it against a sparse bland background.
Materials Shares

What will the lithium price be in 2024?

Will lithium prices continue to fall next year?

Read more »

A group of people in suits and hard hats celebrate the rising share price with champagne.
Materials Shares

5 ASX lithium shares to buy next week

Analysts think these could be the shares to buy if you want exposure to lithium.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Materials Shares

If I invest $10,000 in Pilbara Minerals shares, how much passive income will I receive in 2024?

Is this lithium miner a good option for income investors?

Read more »