On paper, Livent is a very young company. In October 2018, the stock started trading on the New York Stock Exchange with the symbol "LTHM." However, Livent's roots actually go back to the 1940s. Back then, Lithium Corporation of America worked closely with the U.S. government to develop fields of application for lithium as a raw material. In 1985, this company was acquired by FMC. The chemical company spun off its lithium division in 2018 as part of a restructuring and finalized the Livent spin-off five months after the IPO by selling all shares. Livent's stock has performed strongly: At the end of November 2021, it reached an all-time high of USD 33.01 - at which point the price was close to double the IPO price of USD 17.00. In the months that followed, the stock experienced a correction along with the entire lithium sector.
Most recently, Livent has returned to the USD 30 mark. The company itself provided new momentum with its figures for the first quarter of 2022. From January to March, Livent increased sales by 56% year-on-year to USD 143.5m. The bottom line was that the company managed a turnaround: after a small loss in the same period last year, it now posted a surplus of USD 53.2m. "The strong growth in lithium demand has continued in 2022," CEO Paul Graves said. Rising prices for the metal are meeting a very tight market, according to the report. "Livent was able to realize higher prices across its product portfolio," the CEO reported. The Philadelphia-based company supplies battery-grade lithium hydroxide and is currently expanding capacity in the Chinese market here. The second core product is lithium carbonate, where Livent is currently expanding in Argentina. From the beginning of 2023, capacity there is expected to increase by 10,000 tons of lithium carbonate.
Already, Paul Graves has increased the forecast for 2022. He recently expects sales between USD 755m to USD 835m. In the middle of this range, Livent would capture growth of almost 90% year-on-year. Originally, the outlook was for revenues between USD 540m and USD 600m. Profitability is expected to increase even faster than sales. The CEO predicts adjusted earnings before interest, taxes, depreciation and amortization (Ebidta) of between USD 290m and USD 350m. Previously, he had expected USD 200m at best. In 2021, adjusted Ebitda was USD 70m. The higher-than-expected figures as well as the upwardly revised outlook also and especially reflect booming e-mobility. The manufacturers of electrically powered vehicles and batteries are really greedy for lithium. Tesla CEO Elon Musk recently even described the metal as a limiting factor for the growth of the sector. He is urging entrepreneurs to get into the lithium business. Musk himself, meanwhile, is thinking out loud about investing in a mining company with Tesla.
This statement may well have played a role in the recent rebound of Livent shares. The raw materials company is already on Tesla's supplier list. The Californian group obtains lithium materials from Livent's mines in Argentina and refineries in China and the USA. Elon Musk's foray into mining was a reason for Leonteq to launch the Tracker Certificate on the "Battery Supply Chain Basket". This participation product has had a lightning start: Since the fixing on May 11, the tracker has increased in price by almost one tenth compared to the issue price. Since the tracker was issued, Livent's share price has risen by as much as 27%, making it the best performer of the six stocks included in the basket.
Leonteq is now following suit. The Zurich-based expert for structured investment products has issued several softcallable barrier reverse convertibles on Livent. In addition to two single structures, these include a multi BRC. Here, Leonteq brings the lithium share together with Tesla. The duo provides a high coupon of 25% p.a. with a barrier of 55% of the initial level. With an identical risk buffer, the issue based solely on Livent pays a coupon of 19% p.a. in the product currency USD. Investors wishing to invest in CHF can expect a coupon of 16% p.a.. While the term of the multi product ends after one year, the two single BRCs expire after 15 months. The following applies to all versions: As soon as there is a barrier breach, the partial protection expires. In addition, termination and early redemption are possible due to the soft callable feature.
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