Lithium Americas Corp (LAC) Shares Plunge 6.53% on Structural Risks, U.S. Government 5% Equity Stake

Lithium Americas Corp (LAC) shares plunged 6.53% on Monday, marking their lowest level since October 2025, with an intraday decline of 6.64%. The selloff reflects growing concerns over structural risks tied to the company’s capital structure and project timelines.

A critical factor driving the downturn is the U.S. government’s acquisition of a 5.0% equity stake via warrants priced at $0.01 per share. This arrangement, while providing the Department of Energy with a near-cost-free entry, has raised alarms over shareholder dilution. Analysts highlight the lack of investor protections compared to similar deals, such as MP Materials’ agreement, which included price floors and offtake guarantees. The absence of such safeguards has weakened LAC’s appeal amid market volatility.

Revised terms for the Thacker Pass project’s $2.2 billion loan further complicate the outlook. A requirement to deposit $120 million into a reserve account within a year, coupled with deferred repayments of $182 million over five years, has strained short-term liquidity. This cash outflow undermines operational flexibility, even as the project’s revenue generation remains years away, with production slated for 2028. The mismatch between immediate costs and delayed returns has intensified skepticism about the project’s financial viability.

Structural weaknesses in LAC’s capital framework, including layered debt and equity obligations, have deterred investors. The combination of dilutive warrants, deferred repayments, and reserve account requirements creates complexity that could hinder future financing. Analysts argue this structure disproportionately benefits the government while exposing shareholders to prolonged uncertainty. The lack of price floors or offtake commitments exacerbates risks, particularly in a sector prone to price swings and regulatory shifts.

Despite a 200% surge in LAC’s stock since its year-to-date low, the valuation is seen as outpacing fundamentals. The recent rally, driven by speculative momentum and government backing, fails to account for cash-flow constraints and delayed revenue potential. With no immediate earnings and a volatile lithium market, the disconnect between price and intrinsic value has prompted a “sell” rating, targeting $6.50. Broader market sentiment remains cautious, with Wall Street firms maintaining a “hold” stance and a mean price target of $5.76.

Regulatory and strategic risks linger as well. Permitting delays, environmental scrutiny, and geopolitical uncertainties in the lithium supply chain could further delay Thacker Pass. These factors, combined with the company’s current lack of revenue and negative earnings, amplify the perceived risk for investors. The high volatility of lithium prices and macroeconomic trends further cloud LAC’s long-term prospects, leaving the stock vulnerable to continued downward pressure until structural and operational challenges are addressed.