Stardust Power Plunges 21.96%—What's Behind the Sudden Freefall?

Summary
• Stardust Power announces 1-for-10 reverse stock split to regain Nasdaq compliance
• Intraday price drops from $0.3317 high to $0.275 low
• Current price at $0.3024, down 21.96% from previous close of $0.3875

Stardust Power (SDST) is experiencing a dramatic intraday selloff, with its stock price collapsing 21.96% as of 5:13 PM ET. The move follows the company’s announcement of a reverse stock split to address Nasdaq compliance issues. Traders are now scrutinizing whether this strategic maneuver will stabilize the stock or trigger further volatility, with the stock’s 52-week range spanning from $0.1425 to $12.56.

Reverse Split Drives Sharp Decline as Market Reacts
Stardust Power’s 1-for-10 reverse stock split, effective September 8, has triggered immediate market skepticism. While the company frames the move as a strategic step to regain Nasdaq compliance and attract institutional investors, the stock’s intraday plunge suggests investor uncertainty. The reverse split reduces the float to ~8.46 million shares but does not address underlying operational challenges, including the absence of revenue and reliance on project financing for its Muskogee lithium refinery. The sharp price drop reflects a combination of short-term liquidity concerns and skepticism about the company’s ability to meet upcoming milestones, such as FEL 3 engineering completion and permitting advancements.

Electrical Equipment & Parts Sector Mixed as ETN Leads
The Electrical Equipment & Parts sector, represented by the XLI ETF, is up 0.62% intraday, with sector leader Eaton (ETN) rising 0.79%. This divergence highlights SDST’s stock-specific challenges. While Hitachi Energy’s $1 billion U.S. grid infrastructure investment has bolstered sector sentiment, SDST’s reverse split and lack of near-term revenue streams position it as an outlier. The sector’s focus on AI-driven energy demand and domestic manufacturing contrasts sharply with SDST’s reliance on speculative lithium refining progress.

Technical Analysis and ETF Strategy in a Bearish Climate
• 200-day MA: $1.6037 (far above current price)
• RSI: 43.1 (oversold territory)
• MACD: -0.0019 (bearish divergence)
• Bollinger Bands: Price at $0.3024, below middle band ($0.4006)

Technical indicators confirm a short-term bearish bias, with SDST trading well below its 200-day average and RSI signaling oversold conditions. Key support levels to monitor include the 30-day range ($0.4004–$0.4039) and the 200-day range ($0.4813–$0.6313). The stock’s -1.7 PE ratio and negative earnings trajectory suggest limited catalysts for a rebound. With no options listed, traders should focus on ETFs like XLB (Materials Select Sector SPDR) for sector exposure, though XLB’s 0.4% gain today contrasts with SDST’s collapse. A short-term bearish strategy could involve cash-secured puts if the stock tests $0.275, but liquidity risks remain high due to SDST’s 7.9% turnover rate.

Backtest Stardust Power Stock Performance

SDST’s Freefall: A Cautionary Tale for Short-Term Traders
Stardust Power’s 21.96% intraday drop underscores the risks of speculative lithium plays in a volatile market. While the reverse split aims to stabilize the stock, technical indicators and sector divergence suggest further downside. Investors should prioritize risk management, with a watchlist on the 200-day MA ($1.60) as a critical resistance level. Sector leader Eaton’s 0.79% gain highlights the broader industry’s resilience, contrasting with SDST’s struggles. For now, the path of least resistance is lower, with a focus on liquidity events and regulatory compliance updates as potential catalysts. Aggressive short-sellers may consider cash-secured puts if the stock breaks below $0.275, but patience is key in this high-volatility environment.