|Bid||0.8600 x 0|
|Ask||0.8650 x 0|
|Day's Range||0.8200 - 0.8750|
|52 Week Range||0.6850 - 1.4125|
|Beta (5Y Monthly)||0.73|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jul 24, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||2.58|
Lithium prices have been on a big decline since late 2017. An abundance of supply coming online across the globe has offset what is surging demand for the useful metal from the smartphone, tablet and electric vehicle (EV) end-markets. Alongside this plunge in lithium prices, lithium mining stocks - like Galaxy Resources (OTCMKTS:GALXF) stock - have crumbled.Source: Olivier Le Moal/ShutterStock.com But GALXF stock took off like a rocket ship in May and June. Shares nearly doubled in about a month.Importantly, this huge move in GALXF stock came without a big move in lithium prices. Lithium carbonate spot prices have, instead, kept falling over the past few months.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhy, then, did Galaxy Resources stock soar?Because of what could happen to the price of lithium. The stage could be set for a huge rebound, on the back of growing demand and a supply crunch. If that huge rebound in lithium prices materializes, GALXF stock could turn into a muti-bagger over the next few years.Here's a deeper look. Falling Lithium PricesLithium prices appear to be on the cusp of a significant rebound as demand trends accelerate and the supply glut eases. * 7 Utilities Stocks to Buy With Reassuring DividendsLong story short, lithium-ion batteries are at the core of essentially every battery-powered thing in the world. Smartphones. Tablets. Smartwatches. Electric vehicles. They all use lithium-ion batteries, which are superior when compared to traditional battery technology. Lithium-ion batteries charge faster, last longer and have a higher power density (so the batteries can be smaller and lighter - super important for a phone).Consequently, demand for lithium has soared over the past decade. When that soaring demand was not met by soaring supply, lithium prices skyrocketed.Throughout 2016 and 2017, lithium prices more than doubled.But, in late 2017, new mines started to come online and flood the lithium market with more supply than it could handle. And, smartphone demand wavered because of global saturation and EV demand slowed in 2019 as governments cut subsidies.This concurrent surge in supply and wane in demand led to lithium prices falling off a cliff. Lithium mining stocks - like GALXF stock - have followed the price of the battery metal.GALXF stock has dropped about 85% off its early 2018 highs. Surging DemandThanks to the new cars, 5G and the novel coronavirus, lithium prices could again could again double over the next few years.Specifically, EV demand has re-accelerated globally in 2020 - even in the face of a pandemic - because governments across the globe have doubled down on subsidies for clean air vehicles. At the same time, Tesla's (NASDAQ:TSLA) Model 3 is going global. Plus, traditional automakers like Ford (NYSE:F) are set to unveil a slew of new EVs over the next few years. All of these actions imply that global EV demand will only accelerate into 2025.Meanwhile, global smartphone demand should also re-accelerate over the next few years, mostly thanks to the global roll-out of 5G coverage and 5G smartphones. This new technology will spark a multi-year, super-upgrade cycle in smartphones, the likes of which we haven't seen in a long, long time.Also of note, 5G will act as a mega-catalyst for all-things-IoT - and all those things are built on lithium-ion battery technology. Supply CrunchPerhaps most importantly, this surging demand in the smartphone, IoT and EV end-markets over the next few years, will be met with a supply shortage in the lithium market.We have Covid-19 to thank for that.The coronavirus pandemic has, for the moment, killed lithium demand. Lithium prices have collapsed. And the world's biggest lithium producers are postponing and/or canceling new projects.Albemarle (NYSE:ALB), the world's largest lithium company, has significantly delayed expansion plans. Specifically, over the past few quarters, the company has announced plans to delay new projects which would've added about 200,000 tonnes of processing capacity. The 2020 budget has also been cut.Chile's SQM, the world's second-largest producer of lithium, has pushed back its own big expansion plans from late 2020 to late 2021. Australia's Wesfarmers has delayed a final investment decision on its Mount Holland project. China's Tianqi Lithium has postponed commissioning the first phase of its Kwinana project.All in all, producers are cutting back on supply ahead of what will be a demand surge over the next few years.That combination ultimately implies that lithium prices are ready to rebound in a big way. And that's great news for GALXF stock. Galaxy Resources Stock to the Moon?Galaxy Resources is a smaller, lithium mining company with three projects.One of the projects, Mount Cattlin in western Australia, is operational. Another, Sal de Vida in Argentina, is in development, with production targeted for 2022. The third project, James Bay in Canada, is in the exploratory stage and should be in production within five years.In other words, Galaxy Resources is one of the rare lithium mining companies that projects to dramatically expand mining capacity over the next few years.If this dramatic expansion is met with soaring lithium prices, then GALXF stock could soar.Simply consider that when, in 2017, Galaxy Resources had just one operational mine in western Australia and lithium prices were high, GALXF stock was up at $3.50. If lithium prices rebound to or above that level again - a very possible scenario - and Galaxy Resources has two or three operational mines, then it reasons that GALXF stock could soar to $7 or even $10+.But, at the same time, if lithium prices don't rebound and Galaxy Resources keeps expanding production, the company could be in for a world of hurt. Bottom Line on GALXF StockThe best way to look at GALXF stock is as a highly levered play on lithium prices. If lithium prices do rebound with force over the next few years, GALXF stock will soar. If not, this stock could continue on its multi-year decline.I'm optimistic that lithium prices can bottom out over the next few months, and proceed to rebound significantly back to and potentially even above their 2017 highs. This will come on the back of surging smartphone, IoT and EV demand, as well as a supply crunch thanks to the world's biggest suppliers canceling projects amid the Covid-19 pandemic.If that does happen, then GALXF stock will turn into a multi-bagger.Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Galaxy Resources Offers a Lithium Rebound Play appeared first on InvestorPlace.
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