+500% return in 2025 with D-Wave, Plug Power, or BMW partner European Lithium stock?

European Lithium: Analysts see a 500% chance

The chances of a comeback for lithium stocks in 2025 are favourable. In the second half of 2024, strategic investors such as Rio Tinto and Volkswagen began to position themselves by investing in the Canadian company Patriot Battery Metals. In addition, numerous new electric vehicles will come onto the market in 2025. For example, BMW wants to present its revolutionary "new class". When it comes to lithium supply, BMW also relies on a deposit in Austria. The Munich-based company wants to source the raw material for its batteries from there and has already paid a deposit of USD 15 million. This is one reason why European Lithium's share price could skyrocket. The Company is the majority shareholder of NASDAQ-listed Critical Metals Corp (CRML), which is advancing projects such as the Austrian Wolfsberg Lithium Project. Analysts at First Berlin recommended European Lithium's shares for purchase shortly before Christmas, with a target price of EUR 0.14. The shares, which are actively traded on Tradegate, are currently trading at EUR 0.025.

Lithium was out of the stock market by 2024. Without attracting much attention, European Lithium was founded at the beginning of 2024 and took its core activity – the Wolfsberg Lithium Project in Austria – public on the US NASDAQ exchange via Critical Metals Corp (CRML). Critical Metals Corp currently has a market capitalization of USD 588 million. European Lithium holds 73% of CRML shares. This makes the package worth around USD 428 million. European Lithium's market capitalization is only EUR 30 million. European Lithium will have to sell shares in March to finance the Wolfsberg project, as it wants to start supplying BMW in 2027 at the latest. However, even if the secondary offering of the shares were to be made at a 50% discount, the value of this investment would easily justify a doubling or tripling of the share price. But there are even more reasons for a price multiple.

CRML is active not only in Austria but also in Greenland. The analysts at First Berlin point out that CRML (60%) and European Lithium (7.5%) are the majority owners of the Tanbreez project. Tanbreez is fully permitted and hosts the world's largest rare earth resource (2012 JORC compliant), which includes 60% of the world's heavy rare earths outside of China, as well as large resources of niobium, tantalum and zirconium. In addition, European Lithium purchased a lithium project in Ireland in 2024. This is currently being explored by Ganfeng, the largest Chinese lithium producer. In the analysts' view, this mix of projects justifies a fair value of EUR 0.14 per share, implying a price increase of more than 500%. This does not even include two lithium projects in Ukraine. If peace comes as a result of pressure from the new US President Donald Trump, these projects could also represent significant value. Here is the complete study by First Berlin for download.

D-Wave: Is the rally set to continue?

The speed with which stocks in one sector can multiply is something that stocks in the quantum computing sector impressively demonstrated last year. One of the high flyers is D-Wave. Since the end of October alone, the stock has shot up by around 500%. Over the whole of 2024, investors could even reap a return of 1,000%.

At a price of USD 9.80, the Company is now valued at USD 2.7 billion. This already factors in many future opportunities. Such hype stocks can hardly be valued using conventional valuation ratios. Nevertheless, here is a classification: on average, analysts expect D-Wave to generate sales of USD 14.8 million in 2025. The average earnings expectation is USD -0.28 per share. The technology company will have to grow strongly in the coming years to grow into the valuation.

What does the Company do anyway? D-Wave describes itself as a global leader in commercial quantum computing systems, software and services. D-Wave focuses on providing products and services that offer the fastest path to practical, real-world, value-creating applications. The cloud-based company has raised more than USD 300 million in private funding ahead of its initial public offering on the New York Stock Exchange on August 8, 2022. D-Wave is the only company in the world developing both annealing and gate model quantum computers that are unlocking commercial use cases in optimisation today.

Plug Power: Comeback or bankruptcy?

The quantum computing hype faces a test in 2025. Will it prove to be a sustainable trend like artificial intelligence, or will it collapse like hydrogen after the price explosion of 2020/21? At that time, shares in Nel, Plug Power and others also increased tenfold. However, the industry was unable to fulfil the hype. Nel and Plug Power exemplify the dashed hopes that strong growth could eventually evolve into profitable business models. Instead, growth faltered, and both former investor favorites remain far from achieving profitability.

Plug Power shareholders are surely hoping that the hype will return in 2025. However, lithium appears to be more ripe for a comeback, which speaks in favour of an investment in European Lithium. The start of the year will be an exciting time for Plug Power, particularly with the new US president taking office. It is expected that he will cut a large number of subsidies, which could significantly impact Plug Power, as the US company is still waiting for loans. If the funds are not disbursed before the change in administration, the possibility of bankruptcy for the hydrogen pioneer has already been floated.

Which will be the hype topic of 2025? There will certainly be more than one. Quantum computing will be with us for years to come, although a consolidation would do the stocks in this sector well. By contrast, the consolidation in lithium seems to be coming to an end. If more money flows into the industry again, European Lithium is a candidate for a multiple increase. The projects in Austria, Ireland and Greenland alone should be worth many times more than the current valuation of EUR 30 million. In contrast, there is no sign of a comeback in hydrogen – which could also be a good sign. However, for Plug Power, the change in administration could lead to even more significant challenges.