Why This Lithium IPO Was a Huge Disappointment

By Chris Lange Updated Jan 11, 4:33PM EST · Published Oct 11, 11:35AM EDT

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Why This Lithium IPO Was a Huge Disappointment — © Thinkstock

Livent Corp. (NYSE: LTHM) shares disappointed investors when they entered the market on Thursday. The stock priced at $17 and entered the market at $16.65, below the expected price range of $18 to $20 per share, and the stock has only dropped lower as the day has gone on.

The company is offering 20 million shares, with an overallotment option for an additional 3.0 million shares. At the $17 price, the entire offering is valued up to $391.0 million.

The underwriters for this offering are Merrill Lynch, Goldman Sachs, Credit Suisse, Citigroup, Loop Capital Markets and Nomura.

This is a pure-play, fully integrated lithium company, with a long, proven history of producing performance lithium compounds. Its primary products, namely battery-grade lithium hydroxide, butyllithium and high-purity lithium metal, are critical inputs used in various performance applications.

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The firm’s strategy is to focus on supplying high-performance lithium compounds to the fast-growing electric vehicle battery market, while continuing to maintain its position as a leading global producer of butyllithium and high-purity lithium metal. With extensive global capabilities, over 60 years of continuous production experience, applications and technical expertise and deep customer relationships, management believes it is well positioned to capitalize on the accelerating trend of vehicle electrification.

In the filing, the company described its finances as follows:

Our revenue was $264.1 million and $347.4 million in 2016 and 2017, respectively, representing an annual growth rate of 32%, and $210.7 million for the six months ended June 30, 2018, representing a growth rate of 51% compared to June 30, 2017. We are a highly profitable business, generating net income of $47.1 million, $42.2 million and $70.2 million, cash from operating activities of $51.0 million, $58.3 million and $18.0 million and Adjusted EBITDA of $74.8 million, $126.1 million and $94.5 million in 2016, 2017 and the six months ended June 30, 2018, respectively.

The company intends to use the net proceeds from this offering to make a distribution to FMC, which will continue to own a majority of the voting power of shares.

Shares of Livent were last seen down about 3% at $16.44, with a range of $16.00 to $16.65 on the day thus far. Also, about 8 million shares had moved as of 11:30 a.m. Eastern.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.