It's been a wild but presently positive Thursday session for the S&P/ASX 200 Index (ASX: XJO) and many ASX shares. At the time of writing, the ASX 200 has recovered from a morning plunge and is trading water, up 0.06% at just over 8,200 points. But let's talk about Pilbara Minerals Ltd (ASX: PLS) shares.
Unlike the broader market, Pilbara shares are having a shocker this Thursday. The ASX 200 lithium stock closed at $3.31 a share yesterday afternoon. But today, those same shares opened at $3.20 each and are currently down a horrid 5.14% at just $3.14.
There is no obvious catalyst for this big drop out of Pibara itself this session, and there has been no official ASX news out of the company this month yet.
However, there is a rumour going around that might explain why investors are seemingly shunning the company right now.
Is a big stock sale fuelling this lithium sell-off?
A report out of the Australian Financial Review (AFR) today asserts that two investment banks, Morgan Stanley and Bank of America, were "shopping a block trade" in Pilbara shares last night.
These two banks were reportedly asking for buyers for a block of Pilbara shares worth a whopping $270 million. The block trade was apparently "done" at a 4% discount to yesterday's closing price of $3.31. That would imply a sales price of around $3.18 per share.
If accurate, this would at least partly explain why the Pilbara share price is taking such a dramatic haircut during today's trading session.
When there tends to be a big sale of shares, it can tilt the supply and demand curve for a company's shares decisively, albeit usually temporarily. As such, it's not too surprising to see Pilbara shares take a big dip today.
The report asserts that "sources said the block trade was a secondary share sale stemming from an equity collar transaction for China's Ganfeng, which owns 5.7 per cent of Pilbara".
If this is true, it marks the seller (or perhaps sellers) taking advantage of the recent upswing in Pilbara shares. 2024 has been a tough year for all lithium stocks, with Pilbara still down more than 21% year to date. Even so, the company has surged more than 30% from last month's 52-week low of $2.31 a share.
Pilbara share price snapshot
Despite Pilbara shares' recent woes, long-term investors should still be sitting comfortably. Pilbara has been up more than 1,060% over the past five years. At the current Pilbara share price, this ASX 200 lithium stock has a market capitalisation of $9.4 billion.
