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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.

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google, will execute a 20-for-1 stock split on July 15. That split will lower Alphabet’s trading price from about $2,300 to $115, but it won’t actually change its market capitalization or valuations. 

Nonetheless, Alphabet might attract some extra attention from retail investors due to its lower price tag. It could also generate more liquidity through options trading, since a single options contract represents 100 shares. And its lower share price could eventually lead to its inclusion in the price-weighted Dow Jones Industrial Average.

Alphabet might seem like a wobbly investment after its first-quarter revenue and earnings miss, but I believe it’s still a great stock to buy ahead of its split for four simple reasons. 

1. An unbeatable advertising business

In the first quarter, Alphabet generated 80% of its revenue from Google’s advertising business (including YouTube). Its ad business certainly isn’t immune to macro headwinds — it suffered temporary slowdowns during both the Great Recession and the COVID-19 pandemic — but it has always bounced back from such downturns.

Between 2011 and 2021, Google’s annual advertising revenue rose from $36.5 billion to $209.5 billion, a compound annual growth rate of 19.1%. This year, eMarketer estimates Google will control 27.7% of the digital ad market in the U.S. — putting it in first place ahead of Meta Platforms (NASDAQ: FB) (24.2%) and Amazon (NASDAQ: AMZN) (13.3%) — and remain the market leader in most markets outside of China.

Therefore, if you expect Google to ride out the current macroeconomic headwinds, then this is still a great time to invest in its market-leading digital advertising business.

2. An expanding and inescapable ecosystem

Google’s core business has grown so rapidly because its ecosystem is practically inescapable. It owns the world’s largest online search engine, the most widely used mobile operating system (Android), the most popular web browser (Chrome), the top webmail service (Gmail), the leading online mapping service (Google Maps), and the largest free streaming video platform (YouTube). It also operates a growing list of adjacent services like YouTube Music, Google Workspace, Google Pay, and Google Photos.

Those digital tentacles consistently gather personal data from its users, which it uses to better target ads across its ecosystem. That approach is controversial, especially among privacy advocates and antitrust regulators, but it’s remarkably effective for advertisers.

3. A rapidly growing cloud business

Google operates the third-largest cloud infrastructure platform in the world after Amazon (NASDAQ: AMZN) Web Services (AWS) and Microsoft‘s (NASDAQ: MSFT) Azure. Google Cloud held an 8% share of the global market in the first quarter, according to Canalys, compared to a 33% share for AWS and a 21% share for Azure.

Google Cloud won’t catch up to AWS or Azure anytime soon, but its revenue rose 53% to $8.9 billion in 2019, 46% to $13.1 billion in 2020, and 47% to $19.2 billion (amounting to 7% of Alphabet’s total revenue) in 2021. That means it’s growing faster than AWS and at a comparable pace to Azure.

Google Cloud should continue to grow over the long term as it attracts retailers that don’t want to work with Amazon or tether themselves to Microsoft’s sprawling ecosystem of enterprise software. That expansion should gradually reduce Google’s dependence on its advertising business. 

4. High growth rates and a low valuation

Alphabet’s scale and diversification have enabled it to generate robust growth over the past decade. Looking ahead, analysts expect its revenue to rise both 15% in 2022 and 2023. They expect its earnings to dip 1% this year as it ramps up its spending, but to increase 19% in 2023.

Over the next five years, they expect Alphabet’s annual earnings to grow at an average rate of about 17%. Investors should take those long-term estimates with a grain of salt, but they give it a low 5-year price-to-earnings-growth (PEG) ratio of 0.8. Stocks with a PEG ratio below 1.0 are considered undervalued, so Alphabet looks dirt cheap relative to its growth potential. By comparison, Meta and Amazon have 5-year PEG ratios of 1.2 and 3.0, respectively.

It’s still a great long-term investment

Alphabet’s share price might struggle over the next few quarters due to investors’ concerns about macroeconomic headwinds for advertising and the recent slowdown in YouTube’s ad sales.

But as a long-term Alphabet investor, I’m not too worried about these near-term speed bumps. I’m confident Google’s platforms will continue to grow over the next decade, and I believe Alphabet’s upcoming stock split will generate fresh interest from retail investors and options traders. Simply put, this tech titan remains a rock-solid investment in a tumultuous market. 

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

The post 4 reasons to buy Alphabet before its stock split appeared first on The Motley Fool Australia.

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• Brokers say lithium price could halve by 2023 but Core Lithium disagrees. Here’s why

Leo Sun has positions in Alphabet (A shares), Amazon, and Meta Platforms, Inc. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Meta Platforms, Inc., and Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. 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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Experts believe that some S&P/ASX 200 Index (ASX: XJO) dividend shares are good opportunities and could also pay pleasing investment income in the coming years.

While a business isn’t a buy just because it pays a dividend, there are some companies where the valuation is attractive and that company’s dividend can add to the potential returns.

Businesses that are expected to pay attractive dividend yields may be appealing in a climate where capital growth is difficult. But who knows what’s going to happen next?

With that in mind, here are two ASX 200 dividend shares that one particular broker is a fan of.

Telstra Corporation Ltd (ASX: TLS)

Telstra is the largest telecommunications company in Australia, with a market capitalisation of $45 billion, according to the ASX.

It’s currently rated as a buy by the broker Ord Minnett, with a price target of $4.85. That implies a possible rise of more than 25% on its current share price of $3.875.

It thinks the telco will be successful in increasing mobile revenue, with a rise in average revenue per user (ARPU). This will help grow earnings before interest, tax, depreciation and amortisation (EBITDA).

The broker is expecting Telstra to pay a grossed-up dividend yield of 5.9% in FY22 and FY23 with the 16 cents per share annual dividend. Telstra itself has said it wants to keep paying this level of dividends for investors.

The ASX 200 dividend share is looking to grow its dividends over time as its profit and cash flow grow. Telstra sees its competitive position with 5G as an important factor that will help profit growth.

Bapcor Ltd (ASX: BAP)

Bapcor is a leading auto parts company in Australia and New Zealand with a number of businesses, including Burson Auto Parts, BNT, Autobarn, Autopro, Midas, ABS, Shock Shop, and Battery Town.

It’s currently rated as a buy by the broker Ord Minnett. The price target is $8.60, with implies a potential rise of around 40% on the current share price of $6.13.

One of the main reasons for its optimism was a trading update for the FY22 third quarter, where Bapcor said it performed “strongly with strong market demand”, without the impact of lockdown and the level of supply chain disruption in the first half of the financial year.

Year on year, trade revenue increased 5.3% for the quarter and specialist wholesale revenue increased 10.1%.

The ASX 200 dividend share said the fundamental drivers of the automotive aftermarket remain “strong” and are expected to continue to do so. In FY22, Bapcor is aiming to deliver pro forma earnings of at least the level of FY21.

Another thing the broker likes about the business is its potential growth in Asia, where it is expanding with its Burson brand and also benefiting from the Tye Soon stake it owns. Tye Soon is a similar business to Bapcor, operating in South East Asia.

According to Ord Minnett, Bapcor is expected to pay a grossed-up dividend yield of 5.2% in FY22 and 5.6% in FY23.

The post Broker tips 2 ASX 200 dividend shares with major upside AND juicy yields appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Telstra Corporation Limited. The Motley Fool Australia has recommended Bapcor. 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 turning out to be another day of heavy selling for the S&P/ASX 200 Index (ASX: XJO) so far this Thursday. At the time of writing, the ASX 200 is down by a nasty 0.87% and is back under 7,060 points.

And it’s ASX bank shares that seem to be leading the charge off the cliff.

Backing up yesterday’s heavy losses in the banking sector, today has seen major banks tumble. Commonwealth Bank of Australia (ASX: CBA) shares are currently down a painful 2.36%. It’s a similar story for most of the other ASX bank shares. But with one glaring exception – Macquarie Group Ltd (ASX: MQG).

Macquarie shares are presently defying the market’s gloom. This ASX 200 bank is currently up by 0.68% at just over $180 a share. This follows from Macquarie’s outperformance yesterday. The bank finished 0.99% higher on a day that saw utter carnage for most ASX banks.

So what’s going on with Macquarie to warrant such an exceptional treatment from investors?

Macquarie share price rises amid new interest rates for savers

Well, it could be a by-product of a recent announcement the bank made.

It’s likely that the painful losses investors have seen over this week in the bank sector are a result of the jumbo interest rate rise the Reserve Bank of Australia (RBA) delivered on Tuesday afternoon. As we covered earlier in the week, sharply rising rates have the potential to give mortgage-heavy banks a headache.

But Macquarie is using the new cash rate to get on the front foot, it seems.

Hot on the heels of the interest rate announcement, Macquarie revealed a new interest rate for its transaction accounts this week.

According to the company, as of 17 June, customers will enjoy an interest rate of up to 1.5% per annum on Macquarie’s transaction accounts, up from the current 0.2% rate. This new rate is far higher than the interest rates offered by most of the other ASX banks.

So perhaps investors are viewing Macquarie’s charge into offering market-leading interest rates as enough of a reason to spare the bank from the worst of the banking sectors’ falls today.

Whatever the reason for Macquarie shares’ resilience, no doubt investors will be pleased. At the current Macquarie share price, this ASX 200 bank share has a market capitalisation of $69.21 billion, with a dividend yield of 3.45%.

The post Macquarie shares are beating the other ASX 200 banks again today. What’s going on? appeared first on The Motley Fool Australia.

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• What’s the outlook for the Macquarie share price in June?

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 recommended Macquarie Group Limited. 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 Jumbo Interactive Ltd (ASX: JIN) share price is falling with the market on Thursday.

In afternoon trade, the lottery ticket seller’s shares are down 1% to $14.62.

This means the Jumbo share price has now lost a quarter of its value in 2022.

Should investors be betting on the Jumbo share price?

The good news for shareholders is that one leading broker believes Jumbo’s shares can rebound strongly from current levels.

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on the company’s shares to $18.30.

Based on the current Jumbo share price, this implies potential upside of 25% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends of 44 cents per share in FY 2022 and 46 cents per share in FY 2023. This means that if you include the forecast dividends over the next 12 months, the total potential return stretches to over 28%.

What did the broker say?

Morgans came away from Jumbo’s investor forum feeling confident in its growth opportunities.

The broker notes that these include the “expansion of its SaaS business in the profitable charity sector, as well as medium-term penetration of the large US iLottery market.”

Overall, its analysts believe their “positive view on the investment prospects of JIN was reinforced and we reiterate an ADD rating.”

It concluded:

We reiterate our ADD rating. We believe JIN offers excellent strategic growth opportunities, both in Australia and overseas, supported by a steadily expanding domestic market for digital lottery retailing. The business is cash generative and has a low requirement for ongoing capex.

The post Why this top broker is betting on the Jumbo share price rising 25% appeared first on The Motley Fool Australia.

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The Appen Ltd (ASX: APX) share price is tumbling today, but could it turn around in the future?

The technology company’s share price has fallen nearly 7% today and is currently trading at $5.53. For perspective, the S&P/ASX All Technology Index (ASX: XTX) is down nearly 1% today.

So what are analysts tipping for the Appen share price?

What’s the outlook for the Appen share price?

The Appen share price is currently trading at its lowest price since November 2017, a more than 4 year low.

Appen is a technology company that provides data for machine learning and artificial intelligence. Appen’s customers include technology giants such as Google, Amazon, Microsoft and Salesforce.

But on Monday, Appen was booted out of the benchmark S&P/ASX 200 Index (ASX: XJO) as part of the June quarterly rebalance. Shares fell nearly 4% on this day.

Analysts at Citi have recently cut the company’s shares to a neutral rating and cut the price target by 28%. However, Citi still has a $6.60 price target on the Appen share price, which is a nearly 20% upside on the current share price.

The broker downgraded its outlook on Appen due to a tough start to FY22. Citi said this was “weakness primarily due to one customer”. As my Foolish colleague James reported, Citi thinks this customer could be Facebook based on analysis. Citi believes Appen will need to have a stronger second half of the year.

However, in an address to shareholders at the company’s AGM in late May, CEO Mark Brayan outlined Appen’s plans to double revenue by 2026. Brayan said:

We have always been ambitious in growing our business.

By 2026 we are aspiring to at least double FY2021 revenue of US$447 million, improve the mix of our business with one-third revenue from non-Global customers and achieve an EBITDA margin of 20%

Bell Potter recently retained a hold rating on the company’s shares with a $6.50 price target. The broker downgraded the company’s earnings per share (EPS) predictions by 5% for 2022, 5% for 2023 and 4% for 2024.

Appen share price snapshot

The Appen share price has slumped 57% in the past year and plummeted 51% in the year to date.

For perspective, the benchmark ASX 200 index has lost about 3% in the past year.

Appen has a market capitalisation of about $679.9 million based on the current share price.

The post Appen share price sinks 7% to 4-year low. Time to pounce? appeared first on The Motley Fool Australia.

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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 future of the price of lithium could vastly different that previous expected, according to one top broker. However, ASX lithium favourite Core Lithium Ltd (ASX: CXO) isn’t worried.

The company’s chief financial officer Simon Iacopetta is reportedly bullish on lithium prices. He’s also confident of the company’s profitability, even if prices drop.

At the time of writing, the Core Lithium share price is $1.20. That’s 5.16% lower than its previous close and 14.29% lower than it was at the end of last week.

For context, the broader market is also in the red on Thursday. Right now, the S&P/ASX 200 Index (ASX: XJO) is slumping 0.9% while the All Ordinaries Index (ASX: XAO) has fallen 0.96%.

Let’s take a closer look at Core Lithium’s outlook for lithium prices.

ASX lithium developer optimistic despite bearish brokers

A burgeoning supply of lithium could cause demand for the ‘white gold’ to fall over the next 18-months, causing the materials’ price to halve. That’s according to Credit Suisse. The broker is expecting lithium spot prices to slip to US$2,500 by the end of 2023, reports ABC News.

It comes after Goldman Sachs released its own bearish note on the near-term future of lithium last week. The note was likely one reason behind a sell-off among ASX lithium shares.

The brokers’ predictions come on the back of more companies looking to profit on the lithium boom by ramping up production.

One such company is ASX materials share, Core Lithium. It’s focused on developing the Finniss Lithium Project in the Northern Territory.

Iacopetta reportedly told the publication the company was expecting a brighter future for the battery-making material’s price than many brokers. He was quoted as saying:

We expect the shortfall of supply or new products coming to market to result in a continued strengthening of [prices] for the near term … We should be selling into a fairly positive price environment and generating healthy margins.

A recent update from Core Lithium stated the mine’s first production was on schedule to be delivered before the end of the year.

However, Iacopetta reportedly also noted the mine’s feasibility factored in realised prices of its spodumene concentrate lithium ore falling to $1,000.

Core Lithium share price snapshot

While the last fortnight has been rough on the Core Lithium share price, it’s still trading on notable long-term gains.

It’s currently nearly 90% higher than it was at the start of 2022. Shares in the lithium miner have also gained close to 360% since this time last year.

The post Brokers say lithium price could halve by 2023 but Core Lithium disagrees. Here’s why appeared first on The Motley Fool Australia.

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• Could the Core Lithium share price be set to take off again in June?

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 Goldman Sachs. 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 Santos Ltd (ASX: STO) share price is enjoying a good day on the ASX on Thursday.

It spiked to a two-year high in early trade this morning, stretching to $8.85 before nestling back down to $8.77 — up 0.11% — at the time of writing.

In its Annual Energy Paper 2022, released last month, JP Morgan noted that “fossil fuel reliance across the developed and developing world is still high (70% even in Europe) and the International Energy Agency projects that the world may still be 66% reliant on fossil fuels in 2050”.

This is reflected in the current oil and gas rally that’s seen Brent crude break out to new multi-year highs on Thursday, to trade at US$123 per barrel on last check.

Meanwhile, US natural gas futures flared up to yearly highs on Wednesday before reversing course south in today’s session. They are still up more than 160% year on year.

The correlation and dispersion between Santos and the oil and gas prices since March is plotted below.

Why is the Santos share price rallying?

All the recent talk around ASX energy players such as Santos has been on the outlook for oil and gas in coming years.

Unfortunately, opinion varies widely. Analysts at Macquarie said that, while near-term pricing looks strong, prices are expected to simmer down in H2 FY22.

Those at Macquarie note that increased supply from OPEC and other producers should clamp prices back down below Q2 FY22 averages for Brent crude of US$107/barrel.

“We maintain our long-term assumption of $65/barrel but defer this to Q1 of FY24,” the broker said. Previously it forecasted that target for Q1 FY23.

Despite the planned wind-back, the investment bank is still constructive on the Santos share price, rating it a buy on a $10 per share valuation.

Meanwhile, analysts at JP Morgan see the outlook differently in the bank’s 2022 energy outlook. The JP Morgan team said that, back in 2021, “the stars were aligning” for a rebound in oil and gas.

The reason, it said, was “the result of management decisions to focus on market share and revenue rather than profits, and not because of imminent displacement by renewable energy”.

The big picture [is that] global gas and coal consumption in 2021 were already above pre-COVID levels, and global oil consumption should surpass pre-COVID levels sometime next year.

Aside from that, today’s rise in the Santos share price continues the upward trend experienced by the company this year, having set a series of previous 52-week highs up until today’s session.

Macro backdrop might be a factor

The JP Morgan team also notes that, on a global scale, the energy sector trades at a discount on forward earnings multiples to its historical averages dated back to 1990.

“[The] energy sector trades at 1x book value and is an inflation hedge; also capital intensive and less sensitive to wages,” it added.

Santos currently trades on a forward price to earnings (P/E) ratio of 7.13x and trades at 1.6x book value, according to consensus data obtained from Bloomberg.

These points are yet to be priced in by the market, JP Morgan says, meaning there’s potential for further upside should the market realise these numbers.

“With energy demand still in excess of supply, [we] believe the MSCI Global Energy Composite will outperform both renewable energy stocks and the broad equity market again over the next year,” JP Morgan remarked.

Buyers have pushed the Santos share price almost 39% into the green this year to date, and 14% higher over the past 12 months.

The post Why did the Santos share price smash a 2-year high on Thursday? appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow 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 recommended Macquarie Group Limited. 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 All Ordinaries Index (ASX: XAO) is down 1% in early afternoon trade, but this ASX retail share is bucking the selling trend.

Big time.

Having earlier posted gains of more than 30% the Mosaic Brands Ltd (ASX: MOZ) share price is currently up 22%.

The specialty fashion retailer owns a number of name brands including the popular Noni B.

Why is the ASX retail share rocketing?

With no fresh news out from the company today, it looks like investors may be driving up the Mosaic Brands share price following yesterday’s 53% selloff.

Investors punished the ASX retail share after it released an announcement yesterday revealing that difficult trading conditions related to the pandemic will likely result in a full year loss for the 2022 financial year. Management forecast the full year loss despite Mosaic Brands delivering a profit in the first half of the financial year.

The company said, “The May trading month, which included the key Mother’s Day period, continued to see overall trading conditions improve gradually, however at a rate that was below expectations, as our core customers remained highly cautious of the ongoing risks associated with Omicron.”

The ASX retail share closed at 20 cents yesterday and is currently trading for 25 cents.

Year-to-date the Mosaic Brands share price remains down a painful 61%.

The post Guess which ASX retail share is rebounding 22% on Thursday? appeared first on The Motley Fool Australia.

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• Here’s why the Mosaic Brands share price just crashed 56%

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.85% to 7,060.7 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Appen Ltd (ASX: APX)

The Appen share price is down 6% to $5.57. Investors have been selling Appen’s shares this week following a broker downgrade by Citi and weakness in the tech sector. The former saw Citi downgrade the artificial intelligence data services company’s shares to a neutral rating with a $6.60 price target.

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway share price is down 3% to $2.80. This morning this waste management company revealed that a fire at its medical waste processing facility in Dandenong has caused significant damage. This is expected to disrupt operations at the site “for a period of time.” Management estimates that it will impact EBITDA by $2 million to $3 million per month while out of action.

Syrah Resources Ltd (ASX: SYR)

The Syrah share price is down 10% to $1.38. Investors have been selling this graphite producer’s shares amid worrying events near Ancuabe in the Cabo Delgado Province of Mozambique. This is 200 kilometres away from Syrah’s massive Balama Graphite Project. According to the release, the company has received reports of an insurgent attack at a mine project site near Ancuabe. Syrah has suspended transport activities but its mining and processing operations continue for now.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is down over 3% to $21.26. This morning analysts at UBS downgraded this banking giant’s shares to a neutral rating and cut the price target on them to $26.00. UBS highlights that banks have traditionally underperformed the market during periods of high inflation and low growth.

The post Why Appen, Cleanaway, Syrah, and Westpac shares are dropping appeared first on The Motley Fool Australia.

More reading

• Westpac share price slides again and is now down 12% this week
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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 share price of ASX lithium miner Lake Resources N.L. (ASX: LKE) is slumping today.

The Lake Resources share price is currently trading at $1.36, a 6.21% fall. However, in earlier trade, the Lake Resources share price plunged 8% before pulling back. For perspective, the S&P/ASX 200 Index (ASX: XJO) is sliding 0.90% at the time of writing.

So why is the Lake Resources share price struggling today?

More lithium mines in production?

Lake Resources is not the only ASX lithium share having a tough day. The Core Lithium Ltd (ASX: CXO) share price is descending 5.16%, while the Allkem Ltd (ASX: AKE) share price is sliding 2.15%. Meanwhile, the Liontown Resources Limited (ASX: LTR) share price is descending 3.77% and the Mineral Resources Limited share price (ASX: MIN) is 3.01% in the red.

The fall comes after Credit Suisse analysts further weighed in on the lithium price outlook. Head of energy resources research Saul Kavonic warned of a balanced lithium market, in comments to the ABC. Credit Suisse is tipping lithium prices to halve to $US2,500 a tonne, the publication reported. Kavonic added:

We actually might see the market return to balance or even a surplus over the next 18 months. That was a situation we thought was unfathomable only a few months ago.

The analyst also noted there are now more lithium mines in production. This could increase supply. Kavonic said:

We’ve seen a lot of new mines being brought into production, incentivised by the high prices

Goldman Sachs also recently forecast a sharp correction in lithium prices last week, sending ASX lithium shares plunging last Wednesday.

However, not every broker agrees. Analysts at Macquarie have a more optimistic outlook for lithium, predicting a “material valuation upside” on the ASX lithium shares it covers.

Lake Resources was added to the ASX 200 index early this week as part of the June 2022 quarterly rebalance.

Meanwhile, a similar trend in lithium prices was seen in the United States overnight. Lithium giant Lithium Americas Corp‘s (NYSE: LAC) shares fell 4.45% in US markets, while Livent Corp (NYSE: LTHM) shares slid 3.16%. Meanwhile, Piedmont Lithium (NASDAQ: PLL) shares dropped 3%.

Share price snapshot

The Lake Resources share price has exploded 413% in the past year and 35% year to date. However, in the past month, it has descended 18%.

For perspective, the benchmark ASX 200 has lost nearly 3% in a year.

Lake Resources has a market capitalisation of about $1.83 billion based on its current share price.

The post Why is the Lake Resources share price plunging 6%? appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ordinaries shares that had a terrific Tuesday
• Why is the Lake Resources share price rising 6%?
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• The Lake Resources share price has surged 11% today. Can it sustain the rally?
• Which ASX lithium shares are rebounding on Thursday, and which are not?

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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