There was a time when Pilbara Minerals was the star of the lithium world — a rare mix of financial strength, market timing, and direct exposure to the electric vehicle boom. At its peak, it attracted enthusiastic backing from retail and institutional investors alike. But that momentum also drew out the short sellers.

And they were right. At least according to Adam Dawes of Shaw and Partners, speaking on this week’s episode of Switzer Investing TV.

You see, as lithium prices crested before their now-spectacular collapse — falling more than 90% from their highs — Pilbara’s share price followed. That dragged with it the hopes of bullish investors. 

Meanwhile, short positions in the stock surged, with sceptics betting that prices and sentiment would keep falling. 

That view paid off.

“You’ve got to be a believer in the story now,” said Adam Dawes of Shaw and Partners on Switzer Investing TV this week.

“All the shorters were right all the way.”

Despite still being viewed by many as the best operator in the sector — cashed up, well-managed, and not bleeding money — Pilbara Minerals has become a kind of ghost ship of the EV trade. It’s adrift, with no firm timeline on when demand will catch up with the hype.

Back in early-2023, when Pilbara was near its market peak, here's where lithium prices were per tonne:

• Lithium Carbonate (China): Averaged around US$76,000 per ton in January 2023
• Lithium Hydroxide (China): Averaged around US$81,500 per ton in January 2023
• Spodumene (Australia): Averaged around US$6,000 per ton in January 2023

Today, the prices for Lithium Carbonate is around US$9000 per tonne.

“I’ve always said lithium is going to be a 2026 story,” Dawes said. “But now, we could potentially see that going further and further out.”

Lithium prices appeared to stabilise earlier this year, sparking brief hope that the worst was over. But that floor has already given way, with prices slipping again — and with them, the shares of lithium producers.

“You’re going to have to be patient with Pilbara,” Dawes added.

“At some point this will do really well… but it’s been given up on. Nobody wants to have a bar of it anymore.”

Still, he argues, that disinterest could present a contrarian opportunity.

The passionfruit problem

Dawes and host Peter Switzer both pointed to the current imbalance between supply and demand as the root of the problem. 

Lithium mines all over the world are now being closed or mothballed in a response to falling prices and small margins.

And that’s where Switzer introduced his now-viral analogy: the passionfruit problem.

“I remember working in the markets with my dad,” he said. “One day, passionfruit was going for $150 a box. Why? Because there had been a glut — and the farmers had ripped up all their vines. Suddenly, there was no supply. So prices went through the roof.”

The lesson? Commodity markets are cyclical — and supply doesn’t always return as fast as demand. When prices are low, supply disappears. When demand eventually comes back, there’s nothing ready to meet it.

It’s a problem that could play out in lithium too, especially if EV adoption rebounds more sharply than expected in 2026 or beyond. But that recovery isn’t happening yet — and that’s what’s keeping Pilbara stuck in a holding pattern.

“If you want to play lithium,” Switzer added, “you’ve got to become an expert on EVs. That’s when it’ll be in hot demand again.”

For now, Pilbara remains a waiting game. It still might be the right company. But it’s caught in the wrong part of the cycle.