Why are Pilbara Minerals shares sinking 5% today?

Pilbara Minerals was well and truly out of form in the last quarter.

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Pilbara Minerals Ltd (ASX: PLS) shares are tumbling on Thursday.

In early trade, the lithium miner's shares dropped over 5% to $3.68.

The Pilbara Minerals share price has recovered a touch since then but remains down 2.5% at the time of writing.

Why are Pilbara Minerals shares under pressure?

There was only likely to be one outcome for the company's shares this morning after it posted its quarterly update.

That update revealed that the lithium giant had fallen short of expectations for production, sales, and average realised price. In addition, its costs increased greater than what some analysts were expecting.

Here's a summary of how it performed compared to expectations:

  • Production was down 11% to 144,200 dry metric tonnes (dmt) of spodumene. Goldman Sachs was forecasting production of 150,000 dmt and the consensus estimate was 156,000 dmt.
  • Sales volumes fell 17% to 146,400 dmt of spodumene. Goldman was expecting sales volumes 148,000 dmt, whereas the consensus estimate was 162,000 dmt.
  • Pilbara Minerals reported an average realised price of US$2,240 per tonne, which was down 31% quarter on quarter. Goldman was forecasting US$2,433 per tonne and the market was expecting US$3,140 per tonne.
  • Finally, the company's costs came in 16% higher quarter on quarter at US$489 per tonne. Whereas Goldman Sachs was expecting a 10% lift over the previous quarter.

What else happened?

Also potentially weighing on Pilbara Minerals' shares was management commentary about near-term lithium prices. It said:

Demand for lithium raw materials is expected to remain consistent in Q2 FY24 which is typically a stronger period for EV sales. Market pricing for spodumene concentrate and lithium chemicals is however likely to continue to remain volatile in the near-term given uncertain macroeconomic conditions and closely managed inventories in the supply chain.

Following today's decline, Pilbara Minerals' shares are now down approximately 30% over the last 10 weeks.

Motley Fool contributor James Mickleboro 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 Goldman Sachs Group. 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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