MP Materials Stock: Is This Rare-Earth Monopoly A Buy?

MP Materials (NYSE:MP)  is an American rare-earth materials company headquartered in Las Vegas, Nevada, and it’s been one of the market’s hottest names in 2025. The stock has done exceedingly well this year, rising by about 4.5x year-to-date. The company owns and operates the Mountain Pass mine, currently the only operating rare earth mine and processing facility in the United States. Its focus is on producing Neodymium-Praseodymium (NdPr), key rare earth elements used in high-strength permanent magnets for EV motors, wind turbines, drones, and military hardware. However, following the rally, the stock now trades at around 42x forward revenue – that’s a big number for a mining stock. Sure, there may be a ton of potential here, but with profitability still out of reach, traditional valuation metrics don’t tell the full story.

Image by Chris Wiedenhoff from Pixabay

Why the Stock is Surging

Geopolitical tensions have been a big tailwind. In April, after stiff U.S. tariffs on Chinese products, Beijing set up an export-control system for rare earths. By May, China’s rare earth magnet exports had fallen 74% year-over-year, with shipments to the U.S. reportedly plunging 93%. Even after a trade deal between the U.S. and China to ease restrictions, approvals for Western companies remain slow, highlighting the urgency of building secure domestic supply. This gives MP a crucial role in reducing U.S. reliance on China, which makes 90% of the world’s most powerful rare-earth magnets.

Against this backdrop, the U.S. Department of Defense became MP’s largest shareholder after a $400 million stock purchase aimed at boosting the magnets business and securing the domestic supply chain. On top of that, MP signed a $500 million rare earth magnet supply deal with Apple, with prepayments covering most of the cost to expand the company’s Independence downstream center for rare earth metal and magnetics production in Texas.

Operations Progress and Earnings

MP is scaling quickly. Its Q2 2025 beat expectations as NdPr oxide production hit record levels in Q2, up 119% year-over-year, while sales volumes more than tripled to 443 metric tons. Revenue surged 84% to $57.4 million. Management expects NdPr oxide production to climb another 10% to 20% sequentially in Q3. This is impressive growth. The company has also been moving downstream, producing permanent magnets alloys and finished magnets in a move toward more high value high margin products. Sales for the segment rose to $20 million and the company expects to scale production by 2028 to reach 10,000 metric tons annually. The company’s balance sheet is also strong, with close to $2 billion in cash holdings. Separately, see Buy or sell Rigetti Computing Ahead of Its Earnings?

Risks and Why to Avoid

Despite all the momentum, the valuation may be a bit hard to justify. At 42x forward revenue, MP trades more like a hot tech stock than a miner. The business is still unprofitable, with a $53.5 million net loss so far this year and about $126 million in cash burn. While U.S. government and corporate contracts provide stability, execution risk remains high. Chinese suppliers, who still control the majority of supply, has every incentive to find ways around export restrictions and once supply normalizes or the trade war eases, MP’s strategic advantage could diminish. At these multiples, with profitability still distant and heavy reliance on geopolitical tailwinds, the stock appears to be more of a crowded trade rather than a safe bet.

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