Something strange has been happening recently with Pilbara Minerals Ltd (ASX: PLS) shares. No, it's not this ASX lithium stock's share price itself that is odd. Pilbara is currently down a nasty 2.3% so far this Friday, continuing the trend we have seen over most of 2024.
At the current price of $2.24, Pilbara has lost a horrid 43.15% over the past 12 months and 43.6% over 2024 alone. The lithium stock has also retreated by an awful 22.5% over just the past month.
Check that all out for yourself here:
So, losses for the Pilbara share price aren't exactly unusual in 2024. But what has been unusual of late is what ASX short sellers are doing. Pilbara Minerals shares have spent a lot of time at the top of the ASX's most shorted stocks list this year. As we've documented over 2024, shorters have been feasting on Pilbara's woes.
What is unusual is that these short sellers seem to have hung up their boots.
Each week, my Fool colleague James takes stock of the ASX's most shorted shares. Back on 18 November, Pilbara was at its long-occupied position of being the ASX's most-shorted share, with 17.8% of its stock held in a short position.
One week later, this had dropped to 17.3%.
But then this week, we found out that Pilbara Minerals had finally been dethroned as the ASX's most shorted share. It's short interest had suddenly dropped to just 11.6%.
The short sellers are apparently going home… or probably, more accurately, moving on to their next target.
Why are short sellers giving up on Pilbara Minerals shares?
So what's going on here? Well, there's only one reasonable explanation – investors no longer think that this company has any room to fall further.
When a short seller shorts an ASX share, they are essentially making a bet that its share price will go down in the immediate future.
Obviously, Pilbara Minerals shares have been a lucrative short-seller target in 2024, with anyone shorting this stock likely sitting on some healthy profits.
However, that no longer seems to be the case.
As we covered earlier this month, some experts are beginning to predict that lithium prices could recover significantly in 2025 after a rough year in 2024. ASX broker UBS is reportedly predicting lithium could rise as much as 17% next year to US$800 a tonne.
As such, other ASX brokers, including Jefferies and Canaccord Genuity, are calling Pilbara Minerals shares a buy at long last, thanks in part to bullishness over lithium's outlook next year. Let's see if they are right or if Pilbara is set for another year of woe in 2025.
