Here’s why the Novonix share price crashed 19% in March

The Novonix Ltd (ASX: NVX) share price crashed 19.2% in March.

Shares in the battery technology company closed out February trading at $1.56. By the end of trade on 31 March, those same shares were trading for $1.26.

That’s a big loss compared to the S&P/ASX 200 Index (ASX: XJO), which finished March down 1.1%.

Of course, the ASX 200 is no longer the correct benchmark to measure the Novonix share price against. Not since 20 March.

That’s one of the headwinds the stock faced last month that we’ll look at below.

What were ASX 200 investors considering in March?

The month gone by didn’t start out well for the Novonix share price.

On 2 March, shares closed the day down 6.3%.

As my Foolish colleague Mitch Lawler speculated on the day, that may have been linked to a Tesla Inc (NASDAQ: TSLA) presentation.

You see, Novonix produces cathodes and anodes from synthetic graphite for lithium-ion batteries. And investor fears may have been roused by Elon Musk’s revelation that the global EV giant is constructing its own cathode refining facility.

“We are obviously building a cathode processing facility just adjacent to this building […] that’s for cathode refining,” Musk said.

The Novonix share price also wasn’t helped by S&P Global’s quarterly index rebalance.

With the company’s market cap diving alongside its share price, Novonix was booted from the ASX 200 commencing on 20 March.

That could have a detrimental impact on its shares, as many fund managers are limited to investing in ASX 200 companies. These companies also tend to draw more media attention and therefore more interest from retail investors. Atop that, a number of index tracking funds focused solely on ASX 200 shares will no longer be holding Novonix.

Following on those woes, the Novonix share price had a strong finish to the month, closing up 8.6% on 31 March.

This came after the company announced it had agreed to establish an incorporated joint venture with leading Saudi Arabian energy company TAQAT. The agreement will see the JV partners develop and produce anode materials for EVs and grid storage system batteries in the Middle East and North Africa.

Novonix share price snapshot

As you can see in the chart below, following another big down month in March, the Novonix share price has cratered 83% over the past 12 months.

The post Here’s why the Novonix share price crashed 19% in March appeared first on The Motley Fool Australia.

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More reading

• Why is the Novonix share price diving 7% on Thursday?
• Why Deep Yellow, Frontier Digital, Magellan, and Novonix shares are dropping today
• Chair says Novonix share price ‘will respond appropriately over time’
• Why Block, Novonix, Piedmont Lithium, and Syrah shares are racing higher
• ‘Very excited’: Why the Novonix share price is leaping 14% on Friday

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 positions in and has recommended Tesla. 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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