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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock has been underwater in recent memory. Shares of the electric vehicle (EV) giant have been down 45% since the start of 2022. This has led to very polarizing views of the stock, with the bulls insisting that now is the perfect buying opportunity and the bears alleging that the sell-off has just begun.

As many different factors continue to affect the stock market, it’ll be extremely interesting to watch the next few months pan out. Will Tesla bounce back in the second half of the year, or is the Elon Musk-led business bound for darker days?

Here is one reason to pull the trigger on the EV stock and two reasons to look the other way for now.

Buy Tesla because business has never been better

Don’t get it twisted — the EV leader’s business is thriving today. In the first quarter of 2022, total revenues soared 81% year over year to $18.8 billion, and adjusted earnings per share (EPS) crushed Wall Street estimates by 42%, surging 246% to $3.22.

To put the cherry on top, its business is becoming increasingly profitable, with its GAAP (generally accepted accounting principles) operating margin expanding 1,349 basis points year over year to 19.2%. Although supply chain bottlenecks persisted in disrupting the industry as a whole, production and deliveries still grew at a rapid clip. Total production climbed 69% to 305,407, and total deliveries rose 68% to 310,048.

If Wall Street analysts are on par with their assumptions, then the next two years appear bright for the EV juggernaut. In fiscal 2022, analysts project total sales and adjusted earnings per share to grow 59% and 79% year over year, up to $85.6 billion and $12.11, respectively.

Next year, the company is projected to expand its top line by 36% to $116.4 billion, and its bottom line is estimated to increase 32% to $15.95 per share. Combine these surefire growth rates with Tesla’s $17.5 billion in cash on its balance sheet and $2.2 billion in free cash flow (FCF) generation in Q1, and investors can be confident about the company’s business trajectory moving forward.

Keep your distance because of macro conditions and valuation

Before buying shares of the EV leader, there are several pitfalls to be aware of. For starters, the current economic backdrop does not offer an ideal scenario. Record-high inflation has caused the company to increase its car prices across the board, making them less affordable than before.

Likewise, supply chain restraints are expected to limit production for the foreseeable future, and there’s always potential for more factory shutdowns if COVID is to get out of hand. Coupled with the war in Ukraine, which has added just another layer of pressure on the stock market, and CEO Elon Musk’s latest Twitter-related headlines and it’s clear that there are many moving parts that could weigh down Tesla stock in the coming days. 

Despite its latest pullback, the EV stock still isn’t trading at an optimal valuation. Tesla’s price-to-sales and price-to-earnings (P/E) multiples are the lowest they have ever been but the story changes when comparing its valuation to other automobile manufacturers. Today, the EV king is trading at 53.8 times forward earnings, representing a huge premium to traditional car makers Ford and General Motors, which currently peg forward price-to-earnings multiples of 6.3 and 4.8, respectively. Thus, it looks like those who want a piece of Tesla’s growth story will have to pay a rich price for the stock today.

Long-term investors should jump on Tesla today

It’s never a good idea to try to time the stock market. It’s certainly a possibility that near-term headwinds push Tesla’s stock price lower in upcoming trading sessions, but the company’s fresh pullback presents investors with a unique buying opportunity.

And while it’s true that the stock trades at towering valuation multiples compared to traditional auto companies, it’s important to remember that Tesla enjoys superior growth rates and exceptional commercial prospects in the long run. Plus, the stock has historically been successful in growing into its lofty valuation levels, and I don’t think that’ll change in the years to follow. Investors should cash in on the market’s madness today by accumulating shares of the world’s number-one EV enterprise.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Down 45%, here’s 1 reason to buy Tesla’s dip and 2 reasons to stay away appeared first on The Motley Fool Australia.

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• Why Tesla stock sold off 7% today
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• Tesla Looks to Reinforce Its Battery Supply Chain: Why That Matters
• More likely to 5x first: Tesla vs. Ford?

Luke Meindl has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Investing in the stock market can be challenging, and nobody has all the right answers. Also, because investing is a long-term strategy, sometimes you won’t see the repercussions of mistakes until it’s too late.

If I could go back in time, there are several things I’d change about my own investing journey. Here’s how you can avoid making the same mistakes I did.

1. I waited too long to start investing

When I first started saving money, I put everything I had in a savings account. That’s not necessarily a bad idea because a savings account is often the best place for an emergency fund and other short-term savings. 

However, I continued contributing to a savings account well after I had an established emergency fund because I thought it was safer than investing. In reality, I missed out on valuable time to let my money grow.

Over the long term, keeping your money in a savings account can be costly. Even the best accounts only have interest rates of around 1% to 2% per year, which isn’t even enough to keep up with inflation — so your money could actually lose value over time. 

By investing in the stock market, though, you can earn average returns of around 7% to 10% per year over time. Although it can be daunting, investing your money rather than simply saving it can help you earn exponentially more over the long run.

2. I made withdrawals from my retirement account

When I eventually did start investing, I still treated my retirement fund like a savings account. I assumed that since it was my money, I could withdraw it at any time for any reason. I also figured that since I won’t need my retirement savings for decades, withdrawing a little here or there wouldn’t make a difference.

However, there are drawbacks to making early retirement fund withdrawals. For one, if you take money from a 401(k) or traditional IRA before age 59 1/2, you could face taxes and penalties on your withdrawals.

Also, even small withdrawals can affect your long-term savings. Compound interest is the driving force helping your money grow, and it essentially involves earning interest on your entire account balance rather than just your initial investment. The higher your balance, then, the more you’ll earn in compound interest and the faster your money will grow.

When you make withdrawals, though, it’s harder for compound interest to do its job. Repeated withdrawals over time can have a more significant effect, potentially costing you thousands of dollars in missed earnings.

3. I worried too much about the market

When I first began investing, I would obsessively check my account balance every day to see how much my savings had grown. But whenever my balance went down even slightly as a result of normal market fluctuations, I would panic and stop investing.

By now, though, I’ve learned that market volatility is normal and day-to-day fluctuations don’t really matter. What does matter is the market’s long-term performance. 

To this day, I rarely check my account balance — especially when the market is in a slump. I’ve set up automatic contributions so that a set amount of money is transferred from my bank to my retirement account each month, and I don’t even think about how my investments are performing on a day-to-day basis.

Investing in the stock market is a long-term strategy and over time, the market has consistently earned positive average returns. By staying focused on the future, it can be easier to avoid getting hung up on the market’s short-term volatility.

Investing isn’t always easy, but it’s also one of the best ways to generate long-term wealth. While nobody has all the answers, a good strategy can help you earn as much as possible over time. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 of my biggest investing regrets — and How you can avoid them appeared first on The Motley Fool Australia.

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• Guess which ASX mining share just rocketed 80% on a new copper strike
• Leo Lithium shares hit the ASX this week. Here’s what you need to know
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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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The S&P/ASX 200 Materials Index (ASX: XMJ) is 4% in the red today, but one ASX mining share is bucking the trend.

The Culpeo Minerals Ltd (ASX: CPO) share price is leaping 50% to trade at 30 cents. But more sensationally, the company’s share price exploded 84% shortly after open on Monday, before pulling back.

So why is this ASX mining share exploding today?

Copper discovery

Investors appear to be buying up Culpeo shares on the back of exciting copper results.

Assay results showed drilling intersected high-grade copper mineralisation at the company’s Lana Corina Project in Chile.

Intersections at drill hole CMLCD005 included:

• 49 metres (m) at 0.83% copper and 41 parts per million (ppm) molybdenum from 216m to 265m
• 80.87m at 1.06% copper and 145 ppm molybdenum from 302.13 to 383m

Managing director Max Tuesley said:

CMLCD005 is another wide >1% copper intercept confirming our belief that the Lana Corina Project has the potential to host a significant >1% near surface copper orebody.

Further, a new mineralised breccia hosted copper zone was uncovered west of the Lana Pipe site. This corresponds to a T3 ground magnetic target discovered recently.

Commenting on this discovery, Tuesley added:

This has the potential to transform the prospectivity of the north-east sector of the Lana-Corina-Laura mineralised zone with multiple, high priority targets identified in the ground magnetic survey analogous to the T3 target over an approximately 1,000m strike.

Culpeo is working on expanding the mineralised footprint at the project and will report further drilling results to the market in the future.

Share price snapshot

The Culpeo Minerals share price is up 50% in the past 12 months, while it has surged 81% year to date. The company’s shares have rocketed 107% in the past month alone.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has fallen 12.5% in a year.

Culpeo Minerals has a market capitalisation of $11 million based on its current share price.

The post Guess which ASX mining share just rocketed 80% on a new copper strike appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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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It is a big week for Firefinch Ltd (ASX: FFX) shareholders. Later this week, Leo Lithium Limited (ASX: LLL) shares will begin trading on the ASX boards at long last.

Leo Lithium is home to Firefinch’s lithium operations, which have been spun out into a separate listing.

When are Leo Lithium shares hitting the ASX boards?

It won’t be long until Leo Lithium shares are trading alongside fellow lithium developers Core Lithium Ltd (ASX: CXO) and Liontown Resources Limited (ASX: LTR).

Last week, eligible Firefinch shareholders were distributed 1 Leo Lithium share for every 1.4 Firefinch shares they own.

These shares are scheduled to commence trade on the Australian share market on the morning of Thursday 23 June.

What is Leo Lithium?

Leo Lithium has a 50% ownership in the Goulamina Lithium Project in Mali alongside Chinese giant, Ganfeng Lithium.

The Goulamina Lithium Project is one of the world’s largest undeveloped high quality spodumene deposits. Management notes that it has a long life, large scale and low-cost open pit project. Once operating at full capacity, it is expected to produce 726,000 tonnes of annual spodumene concentrate at an average cash cost of US$312 per tonne.

Though, it will take a little bit of time to reach full capacity. Ganfeng and Leo Lithium are initially aiming for stage one production of 506,000 tonnes of spodumene concentrate per annum. This is scheduled to commence during the first half of 2024.

The good news for shareholders is that it isn’t likely that they will be expected to tip in any extra funds to get the party started. Ganfeng has contributed US$130 million in equity funding to the joint venture and will either source up to US$64 million in external debt or provide US$40 million of debt itself to fund the development of stage one production.

Another positive is that the company has an experienced leadership team. This is being led by former Galaxy Resources CEO, Simon Hay.

Hay was CEO of Galaxy until it merged with Orocobre to form Allkem Ltd (ASX: AKE).

He, along with Firefinch shareholders, will no doubt be watching on closely when Leo Lithium shares start trading on Thursday.

The post Leo Lithium shares hit the ASX this week. Here’s what you need to know appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Allkem shares. 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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It’s been a pretty bleak day for most ASX shares so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has lost 0.71% and is now back in the low 6,400s. But no one seems to have told the BrainChip Holdings Ltd (ASX: BRN) share price.

Brainchip shares are having a fairly wild day today. The company is presently flat at 90.5 cents a share, right on where it closed at last week. But at market open this morning, Brainship shares spiked dramatically. This artificial intelligence (AI) company jumped to 96 cents a share soon after trading commenced today.

At the time, that was a rise of 6.67%.

So what’s going on with this ASX tech share today?

Why is the Brainchip share price going haywire today?

Well, we can’t be too certain. Brainchip hasn’t come out with any ASX announcements itself but today is a rather big day for Brainchip. It’s the day that the company has officially joined the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is the flagship index of ASX shares. It tracks the 200 or so largest companies on our share market, ordered and weighted by market capitalisation. Since the values of ASX shares change every day, the index’s provider rebalances the index every three months to ensure that the ASX 200 always reflects the largest companies at the time.

As it happens, Brainchip has made the cut for the first time, helped no doubt by the company’s meteoric near-70% rise in value over the past 12 months. The results of the latest quarterly ASX 200 rebalance were announced back on 3 June and take effect from today.

This saw Brainchip included in the ASX 200, alongside other shares like Core Lithium Ltd (ASX: CXO) and New Hope Corporation Limited (ASX: NHC). They take the place of other ASX shares like Appen Ltd (ASX: APX) and Codan Limited (ASX: CDA), which have now been kicked out of the ASX 200.

ASX 200 inclusion (and exclusion) can have a meaningful impact on a company’s share price. It moves a share towards the centre of the ASX investing universe, and also potentially enables additional investment from fund managers and index funds.

So it’s possible that the gyrations we’ve seen in the Brainchip share price today could be the result of this rebalancing taking effect.

The post Why did the BrainChip share price spike 7% this morning? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Appen Ltd. 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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The Kogan.com Ltd (ASX: KGN) share price is lifting higher today after last week’s disastrous performance.

And while there’s been no news from the company to explain today’s gains, there are a number of happenings that might have influenced it.

At the time of writing, the Kogan share price is $2.97, 6.07% higher than its previous close.

For context, the broader market is struggling on Monday. The S&P/ASX 200 Index (ASX: XJO) is down 0.67% while the All Ordinaries Index (ASX: XAO) has slipped 0.85%.

Let’s take a closer look at what might be going on with the Kogan share price today.

What’s going on with the Kogan share price?

Kogan’s stock appears to be recovering from last week’s 13% tumble despite the company’s silence.

Kogan’s stock hit a nearly four-year low on Friday when it slumped to $2.77 a share. Thus, today’s boost might be a reaction to last week’s selloff.

Interestingly, however, the latest data has placed the online retailer’s stock among the most shorted on the ASX. The company has a short interest of 9% – making it the seventh most shorted stock on the Aussie market.

Today’s gains might also come on the back of a broader boost experienced by many consumer discretionary shares.

At the time of writing, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is up 1.96%, making it the ASX 200’s second-best performing sector behind the S&P/ASX 200 Real Estate Index (ASX: XRE).

The Kogan share price is joined in the green by those of fellow retailers City Chic Collective Ltd (ASX: CCX), Accent Group Limited (ASX: AX1), and Adairs Ltd (ASX: ADH).

That’s despite Deloitte predicting consumer spending will slow in the second half of 2022 amid rising costs, as reported by The Australian.

Sadly, today’s lift hasn’t been enough to boost the Kogan share price into the long-term green.

The stock is currently 66% lower than it was at the start of 2022. It has also slipped nearly 73% since this time last year.

The post Why is the Kogan share price soaring 6% on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 ADAIRS FPO and Kogan.com ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO and Kogan.com ltd. The Motley Fool Australia has recommended Accent Group. 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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It’s been a fairly disappointing start to the trading week for the S&P/ASX 200 Index (ASX: XJO). So far this Monday, the ASX 200 has lost another 0.7% and is now approaching 6,400 points. But it’s been a far worse day for the ASX 200’s largest share by market capitalisation – BHP Group Ltd (ASX: BHP).

The BHP share price has been slammed today. The mining giant is currently down by a nasty 4.82% at $40.47 a share. This latest move means BHP is now down by almost 7% over the past five trading days alone. Its losses over the past month are now stretching close to 15%.

So what’s going on with BHP today to elicit such a loss?

Why is the BHP share price copping a 5% drop today?

Well, it’s not exactly clear. We did hear news last Friday that the company has changed its mind and now wants to keep its Mt Arthur coal mine. But this is unlikely to be meaningfully impacting BHP shares today.

So the most likely culprit is the iron ore price. Iron ore forms the crown jewel of BHP’s mineral production. The company has benefitted enormously from high iron ore prices over the past few years. These have enabled BHP to fund record dividend payments.

But according to reporting in the Australian Financial Review (AFR) today, iron ore futures have just taken a dive. The paper reports that iron ore futures are currently down 9.1% in China, “as concerns mounted about an economic slowdown and the impact it will have on steel demand”.

This would explain why BHP’s fellow ASX 200 iron ore miners are also bleeding heavily today. Rio Tinto Limited (ASX: RIO) shares are also down around 5% to just over $101. Fortescue Metals Group Limited (ASX: FMG) has copped an even worse beating. Fortescue shares are down a nasty 7.3% to $17.23 at the time of writing.

So it’s likely to be fears over the price of iron ore that is hurting the BHP share price so dramatically today.

At the current BHP share price, this ASX 200 mining giant has a market capitalisation of $204.7 billion, with a trailing dividend yield of 11.86%.

The post Why is the BHP share price crashing 5% today? appeared first on The Motley Fool Australia.

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• Why are ASX 200 iron ore shares getting hammered on Monday?
• Own BHP shares? Here’s why the miner could be set for a $1.85 billion boost
• BHP share price ends Friday’s session 8% lower for the week
• Brokers name 3 ASX shares to buy today
• ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices

Motley Fool contributor Sebastian Bowen 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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S&P/ASX 200 Index (ASX: XJO) iron ore shares are taking a beating today.

The benchmark index is back in the red today, down 0.7% in lunchtime trading. But the ASX 200 iron ore shares are doing it much tougher.

At the time of writing, the BHP Group Ltd (ASX: BHP) share price is down 4.66%; the Rio Tinto Ltd (ASX: RIO) share price is down 4.82%; and shares in Fortescue Metals Group Ltd (ASX: FMG) have tumbled 7%.

So, what’s going on?

China’s economy could be slowing

China, as you likely know, is the world’s biggest importer of iron ore which is used in its massive steel industry. The Middle Kingdom imports some one billion tonnes of the commodity each year. That represents approximately 70% of the total global annual purchased iron ore production.

Of course, if the pace of China’s economic growth slows, its demand for steel to construct new buildings and infrastructure will fall. And along with that, its demand for iron ore.

As analysts become increasingly bearish on the outlook for Chinese GDP growth, iron ore futures have nosedived, falling 9.1%.

And that decline is throwing up some strong headwinds for ASX 200 iron ore shares today.

How have these ASX 200 iron ore shares performed in 2022?

Although one of the three ASX 200 iron ore miners is in the red for the 2022 calendar year, all of them still beat the benchmark returns. And that’s without including their lucrative dividends.

Year-to-date, the ASX 200 is down 15.6%.

Over that same period, Fortescue shares are down 10%; the Rio Tinto share price is 1.5% higher; while BHP shares are up a healthy 9.4% so far in 2022.

The post Why are ASX 200 iron ore shares getting hammered on Monday? appeared first on The Motley Fool Australia.

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• Fortescue share price plunges 7%, but here’s why Twiggy’s not worried about a Chinese iron ore cartel
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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 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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The painful market sell-off could play into the hands of would-be bidders with an expert pointing to two ASX 200 infrastructure shares likely to be in play.

Sarah Shaw from 4D Infrastructure thinks the APA Group (ASX: APA) share price and Transurban Group (ASX: TCL) share price make enticing targets amid the current volatility, reported the Australian Financial Review.

Why ASX 200 infrastructure shares make good M&A targets

Infrastructure shares are hotly sort after. They not only provide more stable earnings in an uncertain world, but they also provide an inflation hedge.

Shaw explained:

I really think we’ll have very, very little left in Australia in a couple of years, I wouldn’t take Transurban off the table, clearly APA – I think they are ripe for takeout.

It is easy to come in and take something out where there is no government shareholder or blocking shareholder … anything that does have an open registry is open game.”

ASX 200 infrastructure shares are an endangered species

As it stands, we don’t have many listed infrastructure shares left on the S&P/ASX 200 Index (ASX: XJO).

In the past five years, there has been $154 billion of Australian infrastructure changing hands. That’s according to the AFR quoting Dealogic data.

These include Sydney Airport, AusNet Services, Spark Infrastructure, Tilt Renewables and Infigen Energy.

ASX telecom shares like Vocus Group and TPG Telecom have also been targeted. Bidders are hungry for assets that generate relatively reliable and consistent returns.

The next takeover bid in the sector

There are only three listed infrastructure shares left on the ASX. Besides gas pipline operator APA and toll road owner Transurban, there is the Atlas Arteria Group (ASX: ALX) share price.

But Atlas Arteria’s days on the ASX could be numbered. IFM Investors bought a 15% stake in it this month. The global investor said it was mulling a full $7.8 million takeover bid for the toll road operator.

Barbarians at the gate

One might not think it, but Australia has an open border approach when it comes to foreign ownership of our infrastructure assets. This makes it easy for local and international bidders to acquire our port, rail, road and power assets.

The high volatility in our market could make it easier for takeovers to occur too. Not only are share prices in general under pressure, making assets cheaper to buy, but risk wary shareholders could be more inclined to sell.

There is certainly no shortage of firepower from bidders either. The AFR reported that there was US$304 billion in capital hunting for infrastructure assets at the end of 2021. That’s double the amount from five years ago, according to data group Preqin.

The Transurban share price has fallen around 5% over the past year, while the APA share price has gained 19%.

The post 2 ASX 200 infrastructure shares ‘ripe for takeout’: expert appeared first on The Motley Fool Australia.

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More reading

• Transurban share price jumps as dividends hit pre-pandemic highs
• Transurban shares poised for rapid dividend recovery: expert
• Tolls and phones: Wilsons unveils 3 ASX shares to buy for a slowing economy
• Will June be a good month for the Transurban share price?
• Transurban share price hit by broker downgrade

Motley Fool contributor Brendon Lau 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 positions in and has recommended APA Group. 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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The S&P/ASX 200 Index (ASX: XJO) is again giving us a shaky start to the trading week so far this Monday. At the time of writing, the ASX 200 has slipped by 1.05% and is now at just over 6,400 points. But it’s going even worse today for the Core Lithium Ltd (ASX: CXO) share price.

Core Lithium shares have lost a nasty 6.03% so far today and are now priced at $1.09 a share.

This decisive move downwards might be even more disappointing than normal today. That’s because it’s a rather big day for Core Lithium shares. This ASX lithium stock is now a card-carrying member of the ASX 200 Index.

ASX 200 Index rebalance takes effect

Yes, before today, Core Lithium did not make the cut of the ASX 200 – the flagship index of the ASX that tracks its 200 or so largest shares. Core Lithium was a part of the All Ordinaries Index (ASX: XAO), but now joins the ASX 200 as well.

Every three months, the index provider that runs the ASX 200 (and the All Ords), S&P Global, conducts a rebalancing of these indexes. Both the All Ords and the ASX 200 are market capitalisation-weighted indexes. That means they are organised based on market capitalisation. This, of course, changes every day. To reflect these changes over time, the indexes are rebalanced every quarter.

The changes that take place today were first announced back on 3 June.

So in Core Lithium’s case, we can probably put its new position in the ASX 200 down to the company’s impressive 78% or so rise in 2022 thus far.

When a share joins the ASX 200, it is normally good news for its share price. That is because it catapults a company’s shares towards the mainstream centre of the ASX investing world. Additionally, many ASX fund managers have mandates that dictate they must only choose from ASX 200 shares.

There might also be additional buying pressure from ASX 200 index funds and exchange-traded funds (ETFs). These investment products have to track the ASX 200 exactly. So any share that joins the ASX 200 also gets added to every ASX 200 index fund and ETF.

Core Lithium share price can’t escape the falls

So that’s why some investors may be surprised that Core Lithium shares are getting punished today. It being the first day of this lithium stock’s ASX 200 membership and all.

But ASX lithium stocks are among the ASX shares being hardest hit today. Core Lithium’s stablemate Pilbara Minerals Ltd (ASX: PLS) is down 4.52% so far today at $2 a share. Liontown Resources Limited (ASX: LTR) shares have lost around 2.4%. While Allkem Ltd (ASX: AKE) shares are also in the red 2%.

So even though it’s Core Lithium’s first day in the ASX 200, it doesn’t look like this has saved the company from a rough start to the week.

At the current Core Lithium share price, this now-ASX 200 lithium stock has a market capitalisation of $2 billion.

The post What’s with the Core Lithium share price on Monday? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Transurban share price jumps as dividends hit pre-pandemic highs
• 5 things to watch on the ASX 200 on Monday
• Have ASX 200 shares bottomed? Experts weigh in
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Sebastian Bowen 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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