Down 24% in a month: Is this director buying the dip on IGO shares?

The IGO share price hit a new 52-week low of $9.19 today.

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IGO Ltd (ASX: IGO) shares have lost 24.4% of their value over the past month and registered a new 52-week low of $9.19 on Thursday.

The IGO share price closed the session at $9.35, down 0.11% for the day.

Are we looking at a prime buy-the-dip opportunity on this ASX lithium and nickel share?

And is IGO company director Debra Bakker buying more shares because of it?

Let's investigate.

IGO shares tumble along with other ASX lithium stocks

As we all know, the S&P/ASX All Ordinaries Index (ASX: XAO) has been smacked in the mouth over the past three months, falling 7.4% since 2 August.

The market sell-off has taken the major ASX lithium stocks with it.

IGO has lost a whopping one-third of its market capitalisation over those three months alone.

Since 2 August:

  • IGO Ltd (ASX: IGO) shares are down 34% to $9.35
  • Allkem Ltd (ASX: AKE) shares are down 38% to $9.18
  • Pilbara Minerals Ltd (ASX: PLS) shares are down 25% to $3.64
  • Mineral Resources Ltd (ASX: MIN) shares are down 17% to $59.65.

Why did the IGO share price hit a 52-week low today?

As we mentioned earlier, IGO shares hit a 52-week low of $9.19 today.

Investors have punished the stock this week following Monday's first-quarter update.

IGO revealed a 42% fall in underlying EBITDA to $362 million, but a 39% lift in underlying free cash flow to $530 million.

Like all commodity-related stocks, IGO is a price taker — and lithium prices are falling.

IGO acting CEO Matt Dusci said volatile prices may contribute to a challenging December quarter.

He commented:

Looking ahead, we note the recent volatility in the lithium market and the impact this is having on participants across the supply chain, a dynamic which is not unexpected for a market which is growing rapidly.

Greenbushes shareholders are working on mechanisms to manage surplus volumes to minimise any impact to operations, however IGO notes that December quarter spodumene sales from Greenbushes are likely to be lower than production due to the deferral of some product shipments during the current quarter.

The good news is that top broker Goldman Sachs reckons there's major upside ahead for IGO.

As my Fool colleague James reported on Tuesday, Goldman has a buy rating and a $12.70 share price target on the IGO. This implies a potential upside of 36% for ASX investors over the next 12 months.

In addition, the broker is forecasting a 5.9% dividend yield in FY24 before a fall to 1.7% in FY25 and FY26.

Company director raises stake

Non-executive IGO director Debra Bakker purchased 5,000 IGO shares on-market on Tuesday.

She invested $48,488.92, which means she paid about $9.70 per share.

This topped up her total personal holdings by 14% to 39,800 shares.

Tuesday's buy was her first purchase in more than 12 months.

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 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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