TMC Shares Plunge 17.7% Following U.S. Government Investment in Rare Earth Miner
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: Fool
- Significant Stock Drop: TMC shares plummeted 17.7% on Monday, closing at $7.77 with a market cap of $3.9 billion, indicating investor unease about the company's future amid competitive pressures from U.S. government investments.
- Government Investment Impact: The U.S. government's direct investment in USA Rare Earth could result in a 15% equity stake, with the nearly $1.6 billion deal comprising $277 million in direct funding and $1.3 billion in federal loans, potentially dampening market expectations for TMC.
- Market Reaction: Despite the S&P 500 gaining 0.5% and the Nasdaq Composite rising 0.4%, TMC's stock fell sharply due to disappointment over the investment outlook in the rare earth mining sector, reflecting a lack of confidence among investors.
- Risk Warning: Analysts caution that TMC stock is high-risk and intriguing for investors with a high-risk tolerance; however, due to the uncertainties surrounding its business and the stock's volatility, most investors should approach with caution.
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Analyst Views on TMC
Wall Street analysts forecast TMC stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for TMC is 8.33 USD with a low forecast of 6.50 USD and a high forecast of 11.00 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.
3 Analyst Rating
3 Buy
0 Hold
0 Sell
Strong Buy
Current: 7.510
Low
6.50
Averages
8.33
High
11.00
Current: 7.510
Low
6.50
Averages
8.33
High
11.00
About TMC
TMC the metals company Inc. is a deep-sea minerals exploration company. The Company is focused on the collection and processing of polymetallic nodules found on the seafloor in international waters of the Clarion Clipperton Zone in the Pacific Ocean (CCZ), located approximately 1,300 nautical miles southwest of San Diego, California. The CCZ is a geological submarine fracture zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of around 4,500 miles that spans approximately 1,737,000 square miles. These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as feedstock for battery cathode precursors (nickel, cobalt and manganese sulfates, or intermediate nickel-copper-cobalt matte) for electric vehicles (EV) and energy storage markets; copper cathode for EV wiring, energy transmission and other applications, and manganese silicate for manganese alloy production required for steel production.
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.
Trump Administration's Policy Shift on Rare Earths Shakes Market
- Policy Shift Impact: The Trump administration informed industry leaders that future rare earth projects must demonstrate “financial independence” without federal price supports, marking a significant reversal from last year's aggressive rhetoric, which could undermine the competitiveness of the U.S. rare earth supply chain.
- Market Reaction: The news triggered a steep sell-off in rare earth and critical minerals stocks, with companies like MP Materials and U.S. Antimony experiencing significant declines, reflecting strong market concerns over policy uncertainty that may affect investor confidence.
- Industry Pushback: MP Materials labeled the report as “fake news” on social media, emphasizing that its existing government contract, which includes a price floor of $110/kg, remains intact, demonstrating the company's determination to counter misleading narratives and protect its interests.
- Clarification Controversy: Following the report's publication, Reuters edited the content, initially implying that existing agreements were being rescinded, later clarifying that the pivot applies only to future projects, raising questions among industry observers about the media's influence on market sentiment.
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Rare Earth Stocks Gain Attention Amid U.S.-China Trade Tensions
- 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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