Lithium X Energy (LIX.V) has managed to not only more than triple in share price within the span of a few months, it has also managed to generate a great deal of controversy. The main chat stream on CEO.CA has been ground zero for the LIX conversation since the company’s IPO at the end of last year and the conversation has been heating up in recent weeks along with the LIX share price.
This morning the LIX conversation has reached a fever pitch with many expressing disdain for a promotional piece authored by Future Money Trends (FMT) that was a bit sensational to say the least. So the natural question is why would a legitimate company pay $50,000 for sensational promotion pieces?
While I agree that the FMT piece is over the top and probably not the the kind of promotion that LIX wants to regularly conduct, the fact is that it achieves the goal of getting the LIX story out to a larger audience of investors. For a junior resource company that regularly needs to raise capital from financial markets in order to move forward towards its goals, having a widely followed story is among its highest priorities.
In fact the FMT piece achieves several positive goals for LIX:
- Spreads the LIX story to a much larger audience of investors.
- Helps to improve liquidity in LIX shares which makes the stock more attractive to investors and makes it easier for the company to do financings.
- Gets attention even if some of the attention is negative attention (“there’s no such thing as bad publicity”).
Clearly the company’s main purpose is to identify, explore, and bring forward to production economic lithium resources at a time when the world’s demand for lithium is growing. With a rapidly growing number of eyeballs following the LIX story (including many who are rooting against the company) when the company executes on its plans it is more likely to result in share price appreciation and investment returns for shareholders – which is the overriding goal of any publicly traded company (conduct itself in alignment with shareholder interests). So while the FMT piece is a bit risky in terms of the “pie in the sky” writing within the piece, it does serve many positive purposes and FMT does fully disclose that it is biased and has been compensated to write the piece.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. LIX is a high-risk venture stock and not suitable for most investors. Do your own due diligence and consult a licensed investment advisor prior to making investment decisions. Consult Lithium X Energy Corp. SEDAR profile for important risk disclosures.
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