Down 43%! What on earth happened with Liontown shares in July?

Investors pummelled Liontown shares in July. Time to buy?

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Liontown Resources Ltd (ASX: LTR) shares just finished out a second horror month.

Over the month of June, shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock plunged 30.2% to close on 30 June trading for $1.69 apiece.

But investors who bought shares at that price, thinking that the low might be in, will have endured a month to forget.

With only a handful of up days and a number of steep daily losses, Liontown shares closed on 31 July trading for 97 cents each. That put the share price down a painful 42.6% over the month.

Man with his head on his head with a red declining arrow and A worried man holds his head and look at his computer as the Megaport share price crashes today

Image source: Getty Images

What sent the ASX 200 lithium stock into a tailspin?

Several factors appear to have aligned to put Liontown shares under heavy selling pressure in July.

First, there's the ongoing retrace in global lithium prices. July saw lithium carbonate prices decline by around 10% over the month, according to data from Trading Economics.

That also saw some of the other big Aussie lithium producers sold down, though not nearly as steeply as Liontown.

Pls Group Ltd (ASX: PLS) – formerly Pilbara Minerals – shares, for example, dropped 17.3% in July, while IGO Ltd (ASX: IGO) shares declined by a more modest 6.8%.

What else sent Liontown shares lower?

Investors also bid down the ASX lithium stock over the final three days of July, following the release of Liontown's June quarter update on 29 July.

On the plus side, the miner reported that it had achieved all of its FY 2026 production and cost guidance figures. And the company reached $137 million of net cash flow for the June quarter.

Liontown sold 108,489 dry metric tonnes (dmt) of spodumene concentrate over the quarter, receiving an average realised price of US$1,880 per dmt. Despite the lower realised prices, Liontown reported a 19.3% quarter-on-quarter increase in sales revenue to $235 million.

But investors may have been selling Liontown shares amid concerns over rising costs. The company reported an all-in sustaining cost (AISC) of $1,314 per dmt sold, which was up 5% from the prior quarter.

Are Liontown shares now a good buy?

A number of brokers forecast a sizeable rebound ahead for investors who buy the ASX lithium stock following the big sell-off.

Commenting on the miner's June quarter update, Morgans said, "4Q26 revenue, unit costs and AISC all missed expectations, while production held broadly in line with consensus despite weaker recoveries."

Looking ahead, Morgans retained its buy rating on Liontown with a $1.90 price target.

That represents a 90% upside to the Liontown share price of $1 in late morning trade on Monday, 3 August.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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