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Lithium Americas stock plummets on discounted share offering

Lithium Americas' stock (LAC) plummeted after the company announced it was offering new shares at a discount. The shares were priced at $5, which was nearly 25% lower than Wednesday's closing price.

Yahoo Finance's Julie Hyman and Myles Udland discuss the announcement.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Stephanie Mikulich.

Video Transcript

JULIE HYMAN: Let's get to some trending tickers right now. Shares of lithium Americas dropping in today's session. The move lower coming after pricing its $275 billion underwritten public offering at a discount. Not just a discount, but a deep discount here. The company agreed to sell those shares for 5 bucks apiece, which was a 25% discount to its close yesterday, and it's falling by a little bit more than that today. And interesting here, the company has this big lithium project in Nevada. It's called Thacker Pass. Part of the effort to reshore lithium production, 65% of which comes from China. Why do we care so much about lithium, Myles?

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MYLES UDLAND: I'm waiting for you to tell me. No. Because it's an electric car battery.

JULIE HYMAN: It's used in electric car batteries.

MYLES UDLAND: That's right.

JULIE HYMAN: And if there is going to be an electric car industry, which even if there's falling demand right now, there's going to be an, you know, electric car industry. You need more lithium.

MYLES UDLAND: And you know what? It's a good old-fashioned stock move, right? We talk about mostly the big, magnificent stuff. They've got plenty of money but like the real reason you go public is because you need money. And when your stock goes up a little bit, you hit the bid. And you come out and you say, we're selling a bunch of stock at 5 bucks a share. And the stock goes down, and they say, but we got the money from it. And that's what we need. We needed the money.

JULIE HYMAN: Well, guess what? They're getting some money from the government from the Energy Department, right? For $2.25 billion, but that's a loan to help finance that construction. And they have to hit a bunch of milestones in order to get that money. So it's not free money, per se. So they need--

MYLES UDLAND: Well, stocks down 30%. There's your cost.

JULIE HYMAN: Yeah.

MYLES UDLAND: There's your cost.

JULIE HYMAN: Exactly.