The Core Lithium Ltd (ASX: CXO) share price had a difficult time in August.
During the month, the lithium miner’s shares lost approximately 38% of their value.
This was driven largely by the launch of a surprise capital raising in the middle of the month.
Will things improve for the Core Lithium share price this month?
While August was a month to forget for shareholders, there are signs that the company’s shares could have bottomed out now.
For example, short sellers have been closing their positions at a rapid rate in recent weeks. So much so, the company is no longer one of the top ten most shorted ASX shares. It has been a very long time since I was able to say that.
This appears to be an indication that short sellers feel the worst is now over for the Core Lithium share price and they are moving onto new targets.
What else?
Another sign that the Core Lithium share price rout may be over is the release of a broker note out of Goldman Sachs last month.
Its analysts have been incredibly bearish on the lithium miner for some time. And clearly with good reason given the 70% decline its shares have made over the last 12 months.
Last month Goldman took off its sell rating at long last and upgraded the lithium miner to a neutral rating with a 44 cents price target. It commented:
Since initiating on CXO at Sell on 7 Dec 2022, the CXO share price has fallen 69% vs the ASX 200 at -1% and spodumene/ chemicals prices down -46%/ -62%.
While we still expect developers to underperform ramped up producers into declining lithium prices, we upgrade CXO to Neutral on valuation, with production risks now more priced in at 1.1x NAV (peers 1.1-1.2x NAV), and ~30% of CXO’s market cap now in cash on hand (post-equity raise) potentially partially mitigating exposure to falling lithium prices.
All in all, things are looking a lot more positive now for shareholders. Hopefully that translates into a decent recovery for Core Lithium’s shares.
