Why You Shouldn’t Be Buying MP Materials Stock

MP Materials (NYSE:MP) stock looks very unattractive – making it a very bad pick to buy at its current price of around $27. We believe there are a few concerns with MP stock, which makes it very unattractive given that its current valuation looks extremely high.

We arrive at our conclusion by comparing the current valuation of MP stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of MP Materials along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a weak operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does MP Materials’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, MP stock looks very expensive compared to the broader market.

• MP Materials has a price-to-sales (P/S) ratio of 20.9 vs. a figure of 3.0 for the S&P 500

How Have MP Materials’ Revenues Grown Over Recent Years?

MP Materials’ Revenues have grown marginally over recent years.

• MP Materials has seen its top line shrink at an average rate of 15.3% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 4.6% from $206 Mil to $216 Mil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 24.9% to $61 Mil in the most recent quarter from $49 Mil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is MP Materials?

MP Materials’ profit margins are considerably worse than most companies in the Trefis coverage universe.

• MP Materials’ Operating Income over the last four quarters was $-166 Mil, which represents a very poor Operating Margin of -77.0% (vs. 13.2% for S&P 500)
• MP Materials’ Operating Cash Flow (OCF) over this period was $-8.7 Mil, pointing to a very poor OCF Margin of -4.0% (vs. 14.9% for S&P 500)
• For the last four-quarter period, MP Materials’ Net Income was $-105 Mil – indicating a very poor Net Income Margin of -48.4% (vs. 11.6% for S&P 500)

Does MP Materials Look Financially Stable?

MP Materials’ balance sheet looks strong.

• MP Materials’ Debt figure was $916 Mil at the end of the most recent quarter, while its market capitalization is $4.5 Bil (as of 6/10/2025). This implies a moderate Debt-to-Equity Ratio of 20.3% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $759 Mil of the $2.4 Bil in Total Assets for MP Materials.  This yields a very strong Cash-to-Assets Ratio of 32.1% (vs. 13.8% for S&P 500)

How Resilient Is MP Stock During A Downturn?

MP stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• MP stock fell 50.2% from a high of $49.44 on 2 March 2021 to $24.61 on 13 May 2021, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 January 2022
• Since then, the stock has increased to a high of $58.26 on 4 April 2022 and currently trades at around $27

Covid Pandemic (2020)

• MP stock fell 50.2% from a high of $49.44 on 2 March 2021 to $24.61 on 13 May 2021, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 January 2022

Putting All The Pieces Together: What It Means For MP Stock

In summary, MP Materials’ performance across the parameters detailed above are as follows:

• Growth: Neutral
• Profitability: Extremely Weak
• Financial Stability: Very Strong
• Downturn Resilience: Very Weak
• Overall: Weak

But keeping in mind its extremely high valuation, we think that the stock is very unattractive, which supports our conclusion that MP is currently a very bad stock to buy.

While you would do well to avoid MP stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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