Why are Allkem shares down 11% in November?

This lithium miner's shares were out of form this month.

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It has been a tough month for Allkem Ltd (ASX: AKE) shares.

Although it is on course to record a small gain today, that doesn't change much on a monthly basis.

For example, if things stay the same way, the lithium miner's shares will record a November decline of 11%.

Why were Allkem shares sold off in November?

Investors have been hitting the sell button this month after lithium prices continued to fall.

For example, according to data from Goldman Sachs, the lithium carbonate price was fetching US$19,542 per tonne on 3 November. Whereas at the weekend, it was trading 12.6% lower at US$17,076 per tonne.

It was even worse for spodumene (6%), which was commanding a price of US$2,010 per tonne on 3 November, but at the weekend was down 21.3% to just US$1,580 per tonne.

These prices are a long way from the averages of 2022 when lithium carbonate was going for US$59,868 per tonne and spodumene (6%) was fetching US$4,368 per tonne.

Broad weakness in the industry

As you might imagine given the decline in lithium prices, it isn't just Allkem shares that have suffered this month.

Elsewhere in the industry, Core Lithium Ltd (ASX: CXO) shares are down 25% this month, Liontown Resources Ltd (ASX: LTR) shares have lost 15% of their value, and Sayona Mining Ltd (ASX: SYA) shares are down almost 20%.

Is this a buying opportunity?

The team at Goldman Sachs believes Allkem shares are great value at current levels if you're brave enough.

Despite being bearish on lithium, the broker has a buy rating and lofty $10.90 price target on its shares. This implies a potential upside of 28% for investors over the next 12 months.

It said: "We continue to prefer low-cost assets of scale into lithium price declines (Buy IGO for FCF/ AKE for growth)."

Motley Fool contributor James Mickleboro has positions in Allkem. 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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