Sigma Lithium Slides 5.8% as Lithium Glut Deepens, Cash Burn Mounts

Sigma Lithium shares fell 5.8% to $11.29 in the latest session, extending a selloff that has erased more than a third of the stock's value this year. The broader market edged higher. Lithium producers have been hammered as global supply growth swamps demand.

Lithium prices have collapsed in 2024. New mines in Australia and South America are pouring tons of spodumene and lithium hydroxide into a market that was already well supplied. Sigma, which operates a hard-rock lithium mine in Brazil, has been among the hardest hit. The company reported a net loss of $3.2 million in its most recent quarter, down from a profit a year earlier. Revenue fell 40%.

Canaccord Genuity analysts cut their price target on Sigma to $15 from $20 last week, citing weaker near-term pricing. The firm still rates the stock a buy, betting that a recovery in electric-vehicle demand will eventually absorb the surplus. That recovery has not materialized. EV sales growth has slowed in China and Europe, and battery makers are sitting on large inventories.

Sigma's cash position stood at $94 million at the end of the quarter. At the current burn rate, that gives the company roughly two years of runway. Management has said it will delay expansion plans until prices stabilize. The question is whether two years is enough time for the lithium market to turn around.

For now, the supply overhang shows no signs of easing. Albemarle, the world's largest lithium producer, said last month it would cut capital spending by $750 million and slow its own expansion. That did little to lift prices. Sigma's stock has not found a floor either.