Rare Earth Stocks Gain Attention Amid U.S.-China Trade Tensions
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Source: Fool
- MP Materials Strategy: MP Materials operates the only large-scale rare earth mining and processing site in North America at Mountain Pass, planning to increase its annual production capacity from 1,000 to 10,000 metric tons through the new 10X Facility to meet demand in the electric vehicle and consumer electronics markets.
- Seabed Mining Innovation: The Metals Company aims to extract polymetallic nodules rich in nickel, copper, and cobalt from international waters, having submitted a commercial recovery permit application to NOAA, with permit approval expected by late 2026, although commercial production won't start until 2029.
- USA Rare Earth Acquisition and Expansion: USA Rare Earth is building a facility in Oklahoma to produce rare earth magnets and has secured raw material supply by acquiring Less Common Metals for $100 million, with commercial production on track to begin in the first quarter of this year.
- Government Investment Support: The Trump administration announced a $1.6 billion investment in USA Rare Earth, acquiring a 10% equity stake to bolster the domestic rare earth supply chain, highlighting the government's commitment to reducing reliance on China.
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Analyst Views on MP
Wall Street analysts forecast MP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MP is 76.13 USD with a low forecast of 55.27 USD and a high forecast of 94.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
11 Buy
0 Hold
0 Sell
Strong Buy
Current: 62.160
Low
55.27
Averages
76.13
High
94.00
Current: 62.160
Low
55.27
Averages
76.13
High
94.00
About MP
MP Materials Corp. produces specialty materials that are vital inputs for electrification and other advanced technologies. The Company owns and operates the Mountain Pass Rare Earth Mine and Processing Facility (Mountain Pass) located in California. It is also developing a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (Independence Facility). The Company’s segments include Materials and Magnetics. The Materials segment operates Mountain Pass, which produces refined rare earth products as well as rare earth concentrate and related products. The Materials segment primarily generates revenue from sales of rare earth concentrate, primarily sold for further distribution to a single, principal customer in China, and sales of neodymium-praseodymium (NdPr) oxide and metal, primarily sold to customers in Japan, South Korea, and broader Asia. The Magnetics segment operates the Independence Facility, where it produces magnetic precursor products.
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.
MP Materials Stock Drops Amid Price Guarantee Concerns
- Government Investment Background: Six months ago, the U.S. Department of Defense invested $400 million in MP Materials and signed a 10-year supply agreement, guaranteeing a minimum price of $110 per kilogram for rare earth metals, securing a fundamental revenue stream for the company.
- Rising Price Concerns: Recent reports indicate that the Trump administration may not extend minimum price guarantees to new investment projects, raising market fears about the potential loss of MP Materials' price guarantee, which has led to a 9.4% drop in stock price by 1:15 p.m. ET.
- Contract Guarantee Analysis: Despite increasing market concerns about the price guarantee, sources confirm that MP Materials' price guarantee is already embedded in the contract, suggesting that fears regarding its future earnings may be overstated.
- Profitability Challenges: Although the company has government backing, MP Materials reported losses in both 2024 and 2025, with an expected earnings per share of only $0.31 in 2026, resulting in a nearly 200 P/E ratio at a share price above $60, indicating high valuation risks.
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MP Materials Stock Drops 10.7% Amid Shifting Rare Earth Sentiment
- Market Volatility: MP Materials' stock declined by 10.7% in the week leading to Friday, reflecting a shift in market sentiment towards the rare earth sector, particularly after the announcement of a partnership with the U.S. government that raised investor concerns about future stability.
- Government Funding Support: USA Rare Earth secured a deal with the U.S. government for $277 million in federal funding and a $1.3 billion loan, which initially sparked positive market reactions, indicating the government's commitment to securing the rare earth supply chain.
- Price Floor Agreement: MP Materials established a favorable 10-year pricing floor of $110 per kg for its NdPr products with the Department of Defense, a term not included in USA Rare Earth's agreement, which has led to increased market speculation regarding the differences between the two deals.
- Political Risk Emergence: Although MP Materials' agreement is insulated from potential changes in government policy, the heightened awareness of political risks associated with public-private partnerships has contributed to the stock's decline, prompting investors to carefully assess this risk before making purchases.
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