A Fresh Look at Lithium Americas (TSX:LAC) Valuation After U.S. Loan Review Shakes Thacker Pass Outlook

If you’re holding or eyeing Lithium Americas (TSX:LAC), this latest development is tough to ignore. The U.S. Department of Energy has announced it is re-evaluating the $2.3 billion loan that had previously been cleared for the Thacker Pass lithium project, a core driver of Lithium Americas’ future plans. Investors are grappling with what this means for the company, since the financing would have helped keep the high-profile Nevada mine on track. With project timelines and funding now in question, this government move has added a layer of unpredictability around Lithium Americas’ outlook.

Shares have reacted accordingly, dropping 1.8% in after-hours trading following the news. That comes after a year marked by big swings for the stock, including a 27% price gain over the past year and a stronger performance in recent months. Investors saw nearly 18% growth in the past 3 months, hinting at growing momentum until this latest event. The sudden reversal underscores just how sensitive Lithium Americas is to regulatory and political developments given its reliance on government support for advancing large-scale resource projects in the U.S.

After the recent price jump and this sharp reversal, some investors may be considering whether a compelling buying opportunity is emerging, or if the market is now pricing in all the possible risks and growth drivers.

Price-to-Book of 1.2x: Is it justified?

Based on the price-to-book ratio, Lithium Americas currently trades at 1.2 times its book value. This is significantly lower than both its peer group and the broader Canadian Metals and Mining industry average.

The price-to-book (P/B) ratio compares a company's market value to its net asset value. It is especially relevant for resource and mining firms, where tangible assets and reserves can be a key driver of long-term value. A lower P/B can signal undervaluation or market skepticism about future prospects.

With Lithium Americas trading at a much lower multiple than peers, the market may be pricing in short-term challenges or uncertainty. If the company's assets are accurately valued and execution improves, this discount could narrow over time.

Result: Fair Value of $6.19 (UNDERVALUED)

See our latest analysis for Lithium Americas.

However, ongoing regulatory scrutiny and uncertain project financing remain key risks that could disrupt Lithium Americas' growth trajectory in the near term.

Find out about the key risks to this Lithium Americas narrative.

Another View: Discounted Cash Flow Raises Doubts

While the price-to-book analysis suggests Lithium Americas looks cheap, our DCF model paints a very different picture. This method indicates the stock is overvalued, which challenges the idea that today’s price offers genuine value. Which method will prove more accurate as events unfold?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Lithium Americas to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Lithium Americas Narrative

If you prefer a hands-on approach or want to test your own perspective, it only takes a few minutes to build your own view and analysis. Do it your way.

A great starting point for your Lithium Americas research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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