Stardust Power Completes SPAC Merger, Begins Trading Under SDST Ticker.
- On June 27th, we initiated coverage of Stardust Power, Inc. with a Buy rating and a $19 twelve-month price target. The company’s shares began trading yesterday under the new ticker symbol SDST, after Stardust Power completed its business combination with Global Partner Acquisition Corp II (Nasdaq:GPAC). (Please see our June 27th initiation report published under the ticker symbol GPAC).
- In our initiation report we wrote that, in our opinion, Stardust Power represents a new breed of clean process-based lithium producers in the U.S., set to challenge the entrenched near-monopoly of mining companies in China and other overseas markets like Chile.
- With demand for lithium continuing to accelerate, we believe that developed nations in America and the EU will gradually be shifting their demand to environmentally-friendly suppliers.
- Stardust Power is set to deliver multiple benefits to domestic customers as an eco-friendly U.S.-based producer: Significant savings in overseas shipping and logistics costs, environmental compliance, and a greatly simplified domestic supply chain.
- Stardust Power is poised to become one of the major suppliers of battery-grade lithium in the U.S., as it completes its central lithium refinery plant in Muskogee, Oklahoma, capable of producing 50,000 tons of battery-grade lithium annually with a plan to scale up production over time.
- We expect that the Muskogee plant will go online in 2026, and that Stardust Power will be shipping 25,000 tons of battery grade lithium per year staring in 2026, scaling up to 50,000 tons in 2027. Assuming that run rate, and given current lithium carbonate pricing in the range of $23 - $25K/ton, we are modeling Stardust Power’s revenue to be $75.9M in 2027 and $483M in 2028, growing over 500% y/y on accelerating demand for domestically produced, battery-grade lithium.
- Additionally, we believe that the company can generate $203M in EBITDA in 2028 after theMuskogee plant is fully operational, with EBITDA margins expanding from 28.6% in 2027 to 42% in 2028.
- Our $19 price target assumes a reasonable, peer-group average valuation of 3.3x on an EV/Revenue basis, discounting our 2028 YE revenue estimate to the current year using an annual discount rate/WACC of 15%. Our price target assumes full share conversion and a share count of 48 million shares.
- Founder and CEO Roshan Pujari and other members of the Stardust Power management team will ring the opening bell of the Nasdaq Global Market (“Nasdaq”) on July 11, 2024, to commemorate Stardust Power’s public listing.