Lithium Americas Corp (LAC.US) stock price plunges! JP Morgan warns of significantly overvalued valuation.

Shares of Lithium Americas Corp (LAC.US) plunged by 21.72% on Thursday. Prior to this, the stock had more than tripled in value after news of the US government investing in the company and its Thacker Pass project emerged. However, JPMorgan Chase downgraded the stock from "Neutral" to "Underweight" with a target price of $5, citing significantly high valuation at current levels. JPMorgan analyst Bill Peterson stated that he still sees strong potential in the Thacker Pass project, citing reasons such as low-cost debt financing, a solid off-take agreement with General Motors Company (GM.US), and the project's strategic position as a representative of the Western lithium industry - especially in the context of rising lithium prices in the coming years. However, after considering revised loan terms and dilution factors, he believes that the incremental upside seen in the model is not enough to support the current valuation of Lithium Americas Corp. Peterson pointed out that the US government's investment in Lithium Americas Corp seems more like a move to protect itself from potential losses, rather than a strategic investment similar to the case of MP Materials (MP.US). He stated that retail investors and momentum-driven buying have disconnected the stock from its fundamentals, and once there are signs of normalization in US-China trade relations in the short term, the stock price may see a correction.