What’s Happening With MP Materials Stock?
MP Materials (NYSE:MP) is an American rare-earth materials company headquartered in Las Vegas, Nevada, saw its stock surge by close to 8% in Thursday’s trading. The recent gains come as the Trump Administration is planning to take a 10% equity stake in miner Lithium Americas. Since then, there have been reports that the government could be pushing to take equity stakes in the mineral supply chain crucial to U.S. interests, which could include companies like MP materials. While MP Materials has already made a deal with the Department of Defense in July, it appears that there could be more deals along these lines.
The stock has done exceedingly well this year, rising by about 370% 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 over 45x forward revenue – that’s a big number for a mining stock. So what to expect from MP Materials going forward?
Image by Chris Wiedenhoff from Pixabay
What’s Driving The Surge?
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%. While exports from China have picked up since, with August shipments coming in at 6,146 metric tons, up 15.4% from the year ago period, there remains an urgency to build 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 in July, 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. Now as the Trump administration is seeks additional equity stakes in critical minerals companies, it could bring policy advantages such as faster permitting, supportive regulations, and the potential for long-term supply agreements with agencies like the Department of Defense.
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.
What Are The Risks?
Despite all the momentum, the valuation may be a bit hard to justify. At a valuation of over 45x forward revenue, MP trades more like a hot tech stock than a miner. The business is also 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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