Why the Pilbara Minerals (ASX:PLS) share price is sinking 7% on Monday

This lithium miner’s shares are tumbling on Monday…
The post Why the Pilbara Minerals (ASX:PLS) share price is sinking 7% on Monday appeared first on The Motley Fool Australia. –

The Pilbara Minerals Ltd (ASX: PLS) share price is dropping on Monday morning.

At the time of writing, the lithium miner’s shares are down 7% to $2.10.

Why is the Plibara Minerals share price dropping?

The weakness in the Pilbara Minerals share price on Monday has been driven by news that one of its major shareholders has sold its stake.

According to an announcement out of Mineral Resources Limited (ASX: MIN), the mining and mining services company has decided to exit its shareholding. It held a 5.4% stake prior to selling its holding via a fully underwritten accelerated block trade offered to institutional investors.

The release explains that Mineral Resources raised gross pre-tax proceeds of approximately $328 million from the sale.

Why is Mineral Resources selling its stake?

Mineral Resources was very pleased with the Pilbara Minerals share price performance since its investment in 2016 but felt now was the time to cash in and use these funds internally.

It explained: “MRL is delighted with the share price value delivered by Pilbara Minerals’ development of Pilgangoora but believes it is time to redirect this investment into the Company’s own growth projects, including in the hard-rock lithium and iron ore sectors.”

Mineral Resources became a substantial shareholder in the company as part of an agreement to relinquish offtake rights and a royalty that the company held over Pilbara Minerals’ Pilgangoora project.

What now for Pilbara Minerals’ shares?

Given how Mineral Resources knows the lithium industry extremely well, investors may be concerned that this sale signifies the top for the Pilbara Minerals share price. At least in the near term.

While that may prove to be the case, one leading broker still sees decent upside for its shares.

A note out of Macquarie from late last month reveals that its analysts have an outperform rating and $2.70 price target on the company’s shares.

Based on where Pilbara Minerals’ shares are trading now, this implies potential upside of 35% over the next 12 months.

The post Why the Pilbara Minerals (ASX:PLS) share price is sinking 7% on Monday appeared first on The Motley Fool Australia.

Should you invest $1,000 in Pilbara Minerals right now?

Before you consider Pilbara Minerals, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pilbara Minerals wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

How is the Pilbara Minerals (ASX:PLS) share price performing against its sector?
Here are the 3 heaviest traded ASX 200 shares this Friday

ASX 200 midday update: TechnologyOne hits record high, lithium miners rise

The Pilbara Minerals (ASX:PLS) share price is up 5% on Friday
Here’s why the Pilbara Minerals (ASX:PLS) share price is up 25% in a month

Motley Fool contributor James Mickleboro 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 Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!