Inflation fears crash Pilbara Minerals share price party

The Pilbara Minerals Ltd (ASX: PLS) share price has been on a sensational run of late.

However, that run has come to a grinding halt on Wednesday.

In morning trade, the lithium miner’s shares are down 7% to $4.41.

Is the Pilbara Minerals share price party over?

Investors have been selling down the Pilbara Minerals share price on Wednesday after US inflation came in hotter than expected.

This has sparked fears that the US Federal Reserve will have to be even more aggressive than expected to bring inflation under control.

This could be bad news for a couple of reasons. Firstly, higher interest rates have an impact on valuations. The higher they go, the less investors are willing to pay to own stocks.

In addition, the higher that interest rates go, the more likely that the US economy will fall into a recession in the near future. This could put consumer spending at risk and lead to less demand for electric vehicles.

If this happens, then lithium demand could soften, potentially putting downward pressure on the price of the white metal.

Is this a buying opportunity?

The team at Macquarie are likely to see the weakness in the Pilbara Minerals share price as a buying opportunity. Last month, the broker put an outperform rating and $5.60 price target on its shares.

This implies potential upside of almost 27% for investors over the next 12 months.

The post Inflation fears crash Pilbara Minerals share price party appeared first on The Motley Fool Australia.

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More reading

• Expert predicts stock market will crash 20% lower in the next four weeks as US inflation rages out of control
• Why are ASX 200 shares tumbling like dominos on Wednesday?
• 3 ASX 200 mining shares that smashed all-time highs on Tuesday
• Why did the Core Lithium share price leap another 6% on Tuesday?
• Runaway train? Pilbara Minerals share price leaps to yet another all-time high

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 Scott Phillips.

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