A social (media) experiment by New Energy Narrative proves that lithium investors really need to do their own research
Anyone who has been following me on Twitter (@CoryGroshek) for any significant period of time knows that I don’t agree with Morgan Stanley at all when it comes to their stance on the lithium sector and the supply-and-demand picture for the silvery-white metal that powers our laptops, smart phones, and electric cars.
MANIPULATOR STANLEY DESTROYS THE LITHIUM SECTOR
In a report they published in February of 2018, they made the claim that lithium prices will fall by 45% by 2021, due to what they claimed would become a massive oversupply of the battery metal, and since then, everyone from me and Global Lithium’s Joe Lowry to Benchmark Minerals’ Simon Moores and numerous leaders of a multitude of lithium explorers, miners, and producers have put a stake through the heart of their short-side investment thesis:
- “This is an industry that has repeatedly failed to bring on its supply in the way it predicted. It is always late and it is always more expensive to operate…” – Paul Graves, chief financial officer of FMC Corp, the world’s fourth-biggest lithium producer (Source: Reuters)
- “I am firmly of the view that everyone, including Morgan Stanley, is grossly underestimating how quickly the market is moving on the demand side…” – Ken Brinsden, chief executive of Australian lithium miner Pilbara Minerals (Source: Reuters)
- “Don’t usually comment on forecasts but the Morgan Stanley lithium one is ridiculous. When you understand even the basics of lithium, cathode and battery plants, and auto majors plans you realize the Morgan Stanley scenario has a 1 percent chance of happening…” – Simon Moores, managing director of Benchmark Mineral Intelligence (Source: InvestingNews.com)
- “[There is] ‘legitimate concern on the side of the vehicle manufacturers’ over the reliability of supply sources… (and) the lithium industry ‘has shown a poor track record of delivering projects on time’…” – Patricio de Solminihac, chief executive of SQM, the world’s largest lithium producer (Source: Seeking Alpha, via Australian Financial Review / AFR)
- “Morgan Stanley’s predictions of an additional 200K MT of supply from Chile by 2025 and a steep price decline is another demonstration of the ‘big name’ analysts not understanding lithium supply, demand or the cost curve. Albemarle’s La Negra II expansion taking years to ramp up is just one example of the difficulty bringing new capacity on-line. SQM has little incentive to expand beyond the ~50K MT required in their new agreement. The statement that 500K MT of new capacity will be online by 2025 is well off the mark…” – Joe Lowry, President and CEO of Global Lithium, a lithium consultancy firm now partnered with Lithium Americas and Ganfeng Lithium (Source: Investor Village)
- “The sell-off in lithium equities this year is “overdone,” and “…coupled with ongoing rising demand expectations as auto OEMs look to electrify their fleets, we expect lithium markets to remain sufficiently tight to handsomely reward incumbent producers…” – Goldman Sachs, in a research report dated July 2018 (Source: Financial Times)
The #lithium oversupply scenario proposed by @MorganStanley, which is nothing more than a market manipulation ploy designed to create a cheap buying opportunity for the bank’s clients, is complete B.S. #MorganStanley #NewEnergyNarrative https://t.co/sh3IepjDcm via @NewEnergyNewz
— Cory Groshek (@CoryGroshek) August 15, 2018
Understanding my feelings on Morgan Stanley, you can imagine by shock when I saw, on August 19, 2018, the following tweet, which indicated that Morgan Stanley had reversed its position and was now extremely bullish not only on lithium, but on anything having to do with the “electric revolution” (battery storage, electric vehicles, etc.):
Auto Industry Braces for Electric Shock https://t.co/lqF7h8jPaW
— Things & Stuff. (@cljping) August 19, 2018
HAS MORGAN STANLEY FINALLY SEEN THE LITHIUM LIGHT? NOT QUITE
I couldn’t believe what I just read, so I clicked the link in the tweet, which lead me to an undated Morgan Stanley reported entitled, “Auto Industry Braces for Electric Shock”, which stated, and I quote, verbatim, “Demand for battery components like copper, cobalt and lithium could increase sharply, as could prices.”
Seeing as this statement was quite a big departure from Morgan Stanley’s report from February of 2018, within which it casually attempted to destroy the entire lithium industry in one of the most blatant cases of market manipulation I’ve ever witnessed, I decided to Google the title of this report (“Auto Industry Braces for Electric Shock”), and I was quite surprised at the result I got:
Long story short, my friend @cljping on Twitter got duped… Or did he?
Seeing as I’m already suspicious of the intentions of other investors, especially after the Short-and-Distort scheme Morgan Stanley pulled on us all six months ago, @cljping’s tweet got me thinking: What if @cljping knew that this report was almost a year old, but decided to tweet it out today, as if it just came out, in an attempt to counteract the B.S. narrative that Morgan Stanley put out, by using their own words against them?
That thought then led me to another thought: What if I, with far more followers and far more influence than @cljping, could tweet out a version of this Morgan Stanley report myself, and frame it in such a way that it would also appear that it was just released? If I were to do that, then surely I could get more than the handful of likes that @cljping got, and who knows? Maybe it’ll boost morale among my fellow lithium and battery metals investors, make Morgan Stanley look dumber than legitimate investors already think they are, and act as somewhat of a social experiment, in that it will test to see just how many of my followers and fellow Lithium Lovers actually do their own DD (due diligence) when it comes to tweets like this.
A VERY SUCCESSFUL SOCIAL (MEDIA) EXPERIMENT
Without further ado, and within only about an hour of @cljping’s tweet, I tweeted out the following:
Uh oh, #lithium shorts…looks like your buddies at Manipulator Stanley…err, I mean, Morgan Stanley, are about to do a 180 on you and take you to the cleaners in what could be one of the most epic short squeezes of all times. https://t.co/hEjVV7lkiw
— Cory Groshek (@CoryGroshek) August 19, 2018
The next thing you know, and within only a few hours, the popularity and reach of my tweet has far surpassed that of @cljping’s, and at the time of this writing it has amassed 124 likes, 44 retweets, and 9 comments, which is not too shabby, if you ask me. Additionally, it has generated tweets from other lithium investors, such as the following:
— RedBullish (@RedBullish_) August 19, 2018
— boy1 (@boy1_HC) August 19, 2018
Earlier this year Morgan Stanley predicted a #lithium price slump.
Now MS reports: “Demand for battery components like copper, cobalt and lithium could increase sharply, as could prices.”
And in between – they bought a lot of shares in lithium miners like $GXY at bargain prices.
— Giovanni Torre (@GiovanniTorre) August 20, 2018
This is indeed a big move: @MorganStanley writing: “Auto Industry Braces for Electric Shock (…) Demand for battery components like copper, cobalt and lithium could increase sharply, as could prices.” Great that also analysts can change their minds based on facts. #Lithium #EV https://t.co/wNy2WxzPNG
— Dirk Harbecke (@lithiumforum) August 20, 2018
Now, not all of the responses to my tweet “believed the hype”, so to say, and some Twitter users, were quick to point out that the report I’d referenced was from September of 2017, to which I responded by “playing dumb” and pretending that I, too, had discovered the real date of this report after I’d posted the tweet, because I wasn’t ready to reveal the true nature of my social (media) experiment yet.
— taxloss (@taxlosstrades) August 19, 2018
As much as I like the sounds of Morgan Stanley changing there bearish stance. I think this article was put out before their lithium report. Sept 2017. Would love to be wrong on this so please correct me if I am pic.twitter.com/PYnD5gF3J2
— Weedwatched (@weedwatched) August 19, 2018
FYI: I’m hearing that bullish Morgan Stanley report on #lithium Corey and I referenced today (and still located on their website) may well be old and stale. So, yeah, like most of their research.
— Hedgehog Trader (@HedgehogTrader) August 19, 2018
At this point, with my experiment having run its full course, I believe it’s safe to say that I’ve taken away the following from it (without meaning to insult anyone, because we all make mistakes, and believe me, I am highly fallible myself):
- Almost all lithium investors hate Morgan Stanley, believe their February 2018 report was complete B.S., and can’t wait for the bank to “eat crow” when it inevitably reverses its position in the near future
- The vast majority of lithium investors do not bother to look for a date on the reports they read, and just take them at face value, or worse, are willing to believe anything that other people post on Twitter, with no independent verification done on their part (which, quite honestly, scares me, and really needs to be addressed, individually, by each and every person who liked or retweeted my tweet)
- Despite Morgan Stanley’s extremely bearish stance on lithium, the morale of the majority of lithium investors has not been adversely affected in any significant way, and the people like me, who know that the success of electric vehicles, battery storage, and the larger electric revolution is inevitable, are still extremely bullish on the metal.
Take this experiment with a grain of salt if you wish, but I believe my above findings are very telling and should be studied further by me and my fellow investors, so we can understand, first of all, how easy it is to be tricked, fooled, or otherwise manipulated by influential people on Twitter or reports by investment banks and the mainstream media, and second, how to avoid being tricked, fooled, or otherwise manipulated in such a way in the future.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from/through New Energy Narrative, which I am the founder and owner of).
Please note: This article discusses small-cap stocks trading at less than US $1 per share and/or with less than a US $100 million market cap. Please be aware of the risks associated with these stocks.
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