USA Rare Earth Faces Challenges Amid Market Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 15 2025
0mins
Should l Buy USAR?
USA Rare Earth Inc. (NASDAQ:USAR) has seen its stock price drop by 5.00%, hitting a 5-day low, as the broader market experiences declines with the Nasdaq-100 down 1.05% and the S&P 500 down 0.57%.
Despite the recent government support of a $1.6 billion investment aimed at developing the Round Top mine and a magnet manufacturing facility, USA Rare Earth faces significant challenges. The company is contending with high construction costs and intense competition from China in the rare earth market, which adds uncertainty to its future prospects. Analysts have advised caution for investors, suggesting that the numerous risks involved may warrant consideration of alternative investments like rare earth-focused ETFs.
The implications of these challenges are significant for USA Rare Earth, as the company aims to establish a domestic supply chain for rare earth materials. However, the reliance on external funding and the competitive landscape could hinder its progress, making it crucial for investors to stay informed about the evolving market dynamics.
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Analyst Views on USAR
Wall Street analysts forecast USAR stock price to rise
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 20.130
Low
15.00
Averages
22.75
High
28.00
Current: 20.130
Low
15.00
Averages
22.75
High
28.00
About USAR
USA Rare Earth, Inc. is a supplier of sintered neo magnets and other rare earth metals. The Company is engaged in developing a NdFeB magnet manufacturing plant in Stillwater, Oklahoma, and intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to both supply its magnet manufacturing plant and market surplus materials to third parties. It is focused on developing domestic rare earth production that offers sustainable and secure domestic supply of materials critical to key industries. Its vertically integrated approach consists of sourcing rare earth elements (REEs), in addition to other critical minerals such as gallium, to producing finished NdFeB magnets. The Company serve a variety of industries, such as defense, robotics, electric vehicles, wind power, appliances, cordless tools and computing and semiconductors. The Company owns, Less Common Metals Ltd., which is a scaled ex-China rare earth metal and alloy manufacturer.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
USA Rare Earth Aims for Vertical Integration in Magnet Production
- Vertical Integration Strategy: USA Rare Earth aims to reduce reliance on Chinese rare earths by mining at Round Top Mountain in Texas, which contains at least 15 rare earth elements, positioning itself among the few U.S. companies pursuing a mine-to-magnet approach, thereby enhancing domestic supply chain security.
- Factory Development Timeline: The magnet factory in Oklahoma is expected to open in the first half of 2026, although commercial production is not anticipated until 2028, and this delay could impact the company's short-term revenue growth potential.
- Funding Support: The Trump administration's recent investment of $1.6 billion for a 10% stake in USA Rare Earth strengthens the company's balance sheet, providing crucial funding for its ambitious supply chain development, although it does not eliminate inherent risks.
- Market Volatility: Despite trading above $32 in October 2025, the stock has fallen below $19 due to broader market sell-offs, highlighting the volatility risks the company faces before achieving profitability.
See More
USA Rare Earth Unveils Ambitious Plans Amid Stock Surge
- Heavy Rare Earth Advantage: The Round Top deposit stands out with over 70% heavy rare earth content, and management plans to commence commercial production in 2028, which is expected to significantly enhance the company's competitive position in the electric vehicle and renewable energy sectors.
- Clear Financial Targets: Management has set ambitious 2030 targets of $2.6 billion in revenue, $1.2 billion in EBITDA, and $900 million in free cash flow, with a current market cap of $4.4 billion, indicating attractive valuations of less than 5x FCF and 3.7x EBITDA.
- Engineering Partner Selection: The company has selected Fluor and WSP Global to support the development of the Round Top mine, with a simplified high-volume production process expected to start in three and a half years, significantly shorter than the typical seven-year timeline, showcasing its execution potential.
- Government Support and Market Outlook: With government backing, USA Rare Earth must ensure the successful production of metals and magnets at its Stillwater facility while developing Round Top to meet the growing domestic demand for critical heavy rare earth materials.
See More
USA Rare Earth Shares Surge 16.2% Following Investor Presentations
- Stock Surge: USA Rare Earth shares rose by 16.2% in the week leading to Friday, reflecting investor confidence following the release of detailed investor presentations regarding the Round Top deposit on the company's website.
- 2030 Financial Targets: Management has maintained its financial targets of $2.6 billion in revenue, $1.2 billion in EBITDA, and $900 million in free cash flow by 2030, providing a valuable valuation framework against the current market cap of $4.4 billion.
- Heavy Rare Earth Advantage: The Round Top deposit is notable for containing over 70% heavy rare earth elements, making it the only deposit of its kind globally, which significantly enhances the company's competitiveness in sectors like electric vehicles, defense, and renewable energy.
- Production Plans: The company aims to commence metal and magnet production at its Stillwater facility this year and plans to start commercial production at Round Top in 2028, which, if successful, will greatly enhance its market position and supply chain security.
See More
Senators Question Commerce Secretary's Conflict of Interest in Mining Deal
- Conflict of Interest Concerns: Democratic senators have raised alarms regarding Commerce Secretary Howard Lutnick's involvement with critical minerals startup USA Rare Earth, suggesting potential financial benefits for his family members, and are demanding more information to ensure federal investments are free from conflicts of interest.
- Funding Support Plan: The Commerce Department issued a letter of intent last month to provide USA Rare Earth with $1.6 billion to support the expansion of its rare earth mining and magnet manufacturing business, contingent upon the company securing at least $500 million in private funding.
- Financing Structure Analysis: USA Rare Earth selected Cantor Fitzgerald as the
See More
USA Rare Earth Secures $1.6 Billion Investment from U.S. Government
- Government Investment Support: The U.S. government has announced a $1.6 billion funding package for USA Rare Earth, including a $1.3 billion loan and $277 million in federal grants, aimed at reducing dependence on Chinese rare earths and enhancing the company's market position.
- Production Capacity Enhancement: USA Rare Earth plans to launch its Stillwater manufacturing facility in the first half of 2026, producing neodymium iron boron magnets for high-growth sectors like defense and aerospace, with an expected output of over 10,000 metric tons by 2029 to meet the increasing U.S. demand.
- Full Supply Chain Control: By advancing the Round Top project, the company anticipates achieving full control over its metal-to-magnet supply chain by 2028, granting it a first-mover advantage in the U.S. market, improving margins, and mitigating risks associated with third-party suppliers.
- Long-term Revenue Expectations: If all goes according to plan, the company forecasts annual revenues of approximately $2.6 billion and EBITDA of $1.2 billion by 2030, and while currently pre-revenue, government support will reduce investment risks and provide the necessary funding for commercialization.
See More
International Stocks Outperform U.S. Markets: Is It Time to Increase Your Overseas Investments?
U.S. Stock Performance: The S&P 500 has had a challenging year, remaining flat due to high valuations, concentration in certain indices, and a weaker dollar.
Foreign Equities Outperforming: The iShares MSCI ACWI ex U.S. ETF has outperformed the State Street SPDR S&P 500 ETF Trust by eight percentage points in 2025 and continues to lead by over seven points this year.
Shift in Market Dynamics: This marks a significant shift after nearly two decades of U.S. stock market dominance, raising questions about the sustainability of this trend.
Investment Professionals' Perspectives: Investment professionals are being surveyed on whether they will continue to allocate more resources to foreign markets amidst these changes.
See More
USA Rare Earth Aims for Vertical Integration in Magnet Production
- Vertical Integration Strategy: USA Rare Earth aims to reduce reliance on Chinese rare earths by mining at Round Top Mountain in Texas, which contains at least 15 rare earth elements, positioning itself among the few U.S. companies pursuing a mine-to-magnet approach, thereby enhancing domestic supply chain security.
- Factory Development Timeline: The magnet factory in Oklahoma is expected to open in the first half of 2026, although commercial production is not anticipated until 2028, and this delay could impact the company's short-term revenue growth potential.
- Funding Support: The Trump administration's recent investment of $1.6 billion for a 10% stake in USA Rare Earth strengthens the company's balance sheet, providing crucial funding for its ambitious supply chain development, although it does not eliminate inherent risks.
- Market Volatility: Despite trading above $32 in October 2025, the stock has fallen below $19 due to broader market sell-offs, highlighting the volatility risks the company faces before achieving profitability.
See More
USA Rare Earth Unveils Ambitious Plans Amid Stock Surge
- Heavy Rare Earth Advantage: The Round Top deposit stands out with over 70% heavy rare earth content, and management plans to commence commercial production in 2028, which is expected to significantly enhance the company's competitive position in the electric vehicle and renewable energy sectors.
- Clear Financial Targets: Management has set ambitious 2030 targets of $2.6 billion in revenue, $1.2 billion in EBITDA, and $900 million in free cash flow, with a current market cap of $4.4 billion, indicating attractive valuations of less than 5x FCF and 3.7x EBITDA.
- Engineering Partner Selection: The company has selected Fluor and WSP Global to support the development of the Round Top mine, with a simplified high-volume production process expected to start in three and a half years, significantly shorter than the typical seven-year timeline, showcasing its execution potential.
- Government Support and Market Outlook: With government backing, USA Rare Earth must ensure the successful production of metals and magnets at its Stillwater facility while developing Round Top to meet the growing domestic demand for critical heavy rare earth materials.
See More
USA Rare Earth Shares Surge 16.2% Following Investor Presentations
- Stock Surge: USA Rare Earth shares rose by 16.2% in the week leading to Friday, reflecting investor confidence following the release of detailed investor presentations regarding the Round Top deposit on the company's website.
- 2030 Financial Targets: Management has maintained its financial targets of $2.6 billion in revenue, $1.2 billion in EBITDA, and $900 million in free cash flow by 2030, providing a valuable valuation framework against the current market cap of $4.4 billion.
- Heavy Rare Earth Advantage: The Round Top deposit is notable for containing over 70% heavy rare earth elements, making it the only deposit of its kind globally, which significantly enhances the company's competitiveness in sectors like electric vehicles, defense, and renewable energy.
- Production Plans: The company aims to commence metal and magnet production at its Stillwater facility this year and plans to start commercial production at Round Top in 2028, which, if successful, will greatly enhance its market position and supply chain security.
See More
Senators Question Commerce Secretary's Conflict of Interest in Mining Deal
- Conflict of Interest Concerns: Democratic senators have raised alarms regarding Commerce Secretary Howard Lutnick's involvement with critical minerals startup USA Rare Earth, suggesting potential financial benefits for his family members, and are demanding more information to ensure federal investments are free from conflicts of interest.
- Funding Support Plan: The Commerce Department issued a letter of intent last month to provide USA Rare Earth with $1.6 billion to support the expansion of its rare earth mining and magnet manufacturing business, contingent upon the company securing at least $500 million in private funding.
- Financing Structure Analysis: USA Rare Earth selected Cantor Fitzgerald as the
See More
USA Rare Earth Secures $1.6 Billion Investment from U.S. Government
- Government Investment Support: The U.S. government has announced a $1.6 billion funding package for USA Rare Earth, including a $1.3 billion loan and $277 million in federal grants, aimed at reducing dependence on Chinese rare earths and enhancing the company's market position.
- Production Capacity Enhancement: USA Rare Earth plans to launch its Stillwater manufacturing facility in the first half of 2026, producing neodymium iron boron magnets for high-growth sectors like defense and aerospace, with an expected output of over 10,000 metric tons by 2029 to meet the increasing U.S. demand.
- Full Supply Chain Control: By advancing the Round Top project, the company anticipates achieving full control over its metal-to-magnet supply chain by 2028, granting it a first-mover advantage in the U.S. market, improving margins, and mitigating risks associated with third-party suppliers.
- Long-term Revenue Expectations: If all goes according to plan, the company forecasts annual revenues of approximately $2.6 billion and EBITDA of $1.2 billion by 2030, and while currently pre-revenue, government support will reduce investment risks and provide the necessary funding for commercialization.
See More
International Stocks Outperform U.S. Markets: Is It Time to Increase Your Overseas Investments?
U.S. Stock Performance: The S&P 500 has had a challenging year, remaining flat due to high valuations, concentration in certain indices, and a weaker dollar.
Foreign Equities Outperforming: The iShares MSCI ACWI ex U.S. ETF has outperformed the State Street SPDR S&P 500 ETF Trust by eight percentage points in 2025 and continues to lead by over seven points this year.
Shift in Market Dynamics: This marks a significant shift after nearly two decades of U.S. stock market dominance, raising questions about the sustainability of this trend.
Investment Professionals' Perspectives: Investment professionals are being surveyed on whether they will continue to allocate more resources to foreign markets amidst these changes.
See More
