USA Rare Earth Stock Plummets After Subsidy Cancellation
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6d ago
0mins
Source: Fool
- Stock Volatility: USA Rare Earth shares surged nearly 8% on Monday but plummeted 13% by Thursday morning, indicating investor anxiety and uncertainty about the company's future prospects.
- Government Loan Support: The U.S. Department of Commerce announced an extension of a $1.3 billion CHIPS Act loan and a $277 million equity stake acquisition in the rare earth miner, yet this support failed to stabilize the stock price, raising market concerns.
- Price Guarantee Cancellation: The Trump administration's decision to withdraw minimum price guarantees for U.S. critical mineral projects acknowledges congressional funding shortfalls and market pricing complexities, leading to diminished investor confidence in the rare earth sector.
- Deteriorating Profit Forecast: Analysts project that USA Rare Earth will incur a loss of $252 million this year, highlighting the financial pressures and market challenges the company faces without government backing.
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Analyst Views on USAR
Wall Street analysts forecast USAR stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for USAR is 22.75 USD with a low forecast of 15.00 USD and a high forecast of 28.00 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.
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 23.530
Low
15.00
Averages
22.75
High
28.00
Current: 23.530
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.
White House Plans to Control Key Mineral Prices
- Pricing Control Initiative: U.S. Vice President Vance announced plans to establish a trading bloc aimed at countering China's control over rare earth mineral markets, although this initiative may introduce new challenges for the industry, particularly impacting USA Rare Earth.
- Impact of Project Vault: President Trump's Monday announcement of 'Project Vault' involves a $12 billion investment in national stockpiling of critical industrial materials, which is beneficial for USA Rare Earth, yet the stock fell 8.4%, indicating investor concerns.
- Market Volatility: Despite favorable news, USA Rare Earth's stock price dropped again on Wednesday, reflecting investor worries about potential price controls and weakened demand, leading to unstable market sentiment.
- Production Outlook: Despite uncertainties, USA Rare Earth still expects to begin production of much-needed magnets later this year, indicating the company's ongoing potential in critical mineral resources.
See More
USA Rare Earth Seizes Strategic Opportunity Amid Supply Chain Urgency
- Market Dependency Issue: According to the International Energy Agency, China accounted for 59% of global rare earth mining, 91% of refining, and 94% of permanent magnet production in 2024, highlighting the U.S.'s uncomfortable reliance on China for rare earth metals, where a policy shift could severely impact the American economy.
- Control of Key Resources: USA Rare Earth’s Round Top Deposit is one of the largest polymetallic bodies in the U.S., containing at least 15 rare earth elements and lithium, with heavy rare earth elements critical for permanent magnet production, positioning the company for significant market potential.
- Production Capacity Development: The company is constructing a magnet factory in Oklahoma and investing in its R&D lab in Colorado to identify the most cost-effective extraction and production techniques, laying the groundwork for future large-scale production.
- Funding and Market Outlook: By 2026, USA Rare Earth has raised approximately $3.1 billion for the development of the Round Top mine and the magnet factory, including $1.6 billion in loans and federal grants, and if large-scale production is achieved, it could attract major clients like Ford, GM, and the Department of Defense, significantly boosting revenue.
See More
Nvidia's $2 Billion Investment in CoreWeave Highlights AI Infrastructure Needs
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- Deepening Strategic Partnership: The collaboration between Nvidia and CoreWeave aims to meet the extraordinary demand for Nvidia's AI factories, with plans to build 5 gigawatts of AI factories by 2030, and this investment will accelerate that process, further solidifying Nvidia's leadership in the AI sector.
- Liquidity Crisis Concerns: While Nvidia's investment is seen as support for CoreWeave, critics note that CoreWeave may be facing cash flow shortages and debt burdens, suggesting that Nvidia's investment could be a move to mitigate the risk of its partner's potential bankruptcy.
- Market Outlook Analysis: As AI technology rapidly evolves, Nvidia's investment is not only a lifeline for CoreWeave but also a strategic positioning within the entire AI ecosystem, reflecting the company's forward-thinking approach in future market competition.
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NVIDIA Invests $2 Billion in CoreWeave to Boost AI Infrastructure
- Investment Scale: NVIDIA announced a $2 billion investment in CoreWeave, purchasing shares at approximately $87 each, reflecting a 6.5% discount from Friday's closing price, aimed at supporting CoreWeave's expansion of AI data center infrastructure to meet growing market demand.
- Market Reaction: Following the announcement, CoreWeave's shares surged over 10%, indicating a positive market response to NVIDIA's investment and reflecting investor optimism regarding the demand for AI infrastructure.
- Strategic Significance: NVIDIA's investment not only supports CoreWeave but also signifies its long-term strategic positioning in the AI sector, with plans to build 5 gigawatts of AI factories by 2030 to address future technological needs.
- Risk Consideration: While the investment is seen as a support for CoreWeave, analysts express concerns that NVIDIA may be overly reliant on CoreWeave financially, especially as it faces liquidity crises and debt pressures, which could impact NVIDIA's long-term investment returns.
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USA Rare Earth Shares Volatile Amid Policy Announcements
- Stock Volatility: USA Rare Earth (USAR) shares fell 8.4% to $23.50 today, primarily influenced by the Vice President's announcement of a trading bloc, despite the plan seemingly favoring the company.
- Policy Context: President Trump's 'Project Vault' aims to stockpile $12 billion worth of critical industrial materials, which initially boosted stock prices, but the market remains cautious about its long-term implications.
- Market Concerns: Investors are worried that the newly established price controls could lead to declining rare earth prices, weakening the company's pricing power and impacting future profitability.
- Production Outlook: Despite the policy uncertainties, USA Rare Earth still expects to begin production of much-needed magnets later this year, indicating the company's long-term potential in critical mineral resources.
See More
U.S. Intensifies Competition in Critical Minerals Sector
- Critical Minerals Strategy: The U.S. government has prioritized critical minerals as a national security issue, launching a strategic stockpile initiative called 'Project Vault' aimed at enhancing supply chain control for electric vehicles and defense systems, thereby elevating the nation's position in global competition.
- Geopolitical Implications: The intensifying competition between the U.S. and China in the critical minerals sector, particularly in rare earths where China holds about 70% of the global market share, necessitates increased U.S. focus on countries like Colombia, Mexico, and Venezuela to secure resource supply chains.
- Market Volatility Expectations: While the market has largely shrugged off geopolitical tensions, investors remain optimistic about fiscal stimulus and strong earnings growth, anticipating continued volatility, especially in the critical minerals and alternative investment sectors.
- Investment Opportunities: Following the surge in rare earth mining stocks due to the critical minerals stockpile announcement, investors are encouraged to directly invest in commodities rather than related companies to achieve purer market exposure, indicating a growing interest in mining and alternative investments.
See More
White House Plans to Control Key Mineral Prices
- Pricing Control Initiative: U.S. Vice President Vance announced plans to establish a trading bloc aimed at countering China's control over rare earth mineral markets, although this initiative may introduce new challenges for the industry, particularly impacting USA Rare Earth.
- Impact of Project Vault: President Trump's Monday announcement of 'Project Vault' involves a $12 billion investment in national stockpiling of critical industrial materials, which is beneficial for USA Rare Earth, yet the stock fell 8.4%, indicating investor concerns.
- Market Volatility: Despite favorable news, USA Rare Earth's stock price dropped again on Wednesday, reflecting investor worries about potential price controls and weakened demand, leading to unstable market sentiment.
- Production Outlook: Despite uncertainties, USA Rare Earth still expects to begin production of much-needed magnets later this year, indicating the company's ongoing potential in critical mineral resources.
See More
USA Rare Earth Seizes Strategic Opportunity Amid Supply Chain Urgency
- Market Dependency Issue: According to the International Energy Agency, China accounted for 59% of global rare earth mining, 91% of refining, and 94% of permanent magnet production in 2024, highlighting the U.S.'s uncomfortable reliance on China for rare earth metals, where a policy shift could severely impact the American economy.
- Control of Key Resources: USA Rare Earth’s Round Top Deposit is one of the largest polymetallic bodies in the U.S., containing at least 15 rare earth elements and lithium, with heavy rare earth elements critical for permanent magnet production, positioning the company for significant market potential.
- Production Capacity Development: The company is constructing a magnet factory in Oklahoma and investing in its R&D lab in Colorado to identify the most cost-effective extraction and production techniques, laying the groundwork for future large-scale production.
- Funding and Market Outlook: By 2026, USA Rare Earth has raised approximately $3.1 billion for the development of the Round Top mine and the magnet factory, including $1.6 billion in loans and federal grants, and if large-scale production is achieved, it could attract major clients like Ford, GM, and the Department of Defense, significantly boosting revenue.
See More
Nvidia's $2 Billion Investment in CoreWeave Highlights AI Infrastructure Needs
- Significant Investment: Nvidia's announcement of a $2 billion investment in CoreWeave, purchasing shares at approximately $87 each, represents a 6.5% discount from last Friday's closing price, resulting in a more than 10% surge in CoreWeave's stock, indicating strong market demand for AI infrastructure.
- Deepening Strategic Partnership: The collaboration between Nvidia and CoreWeave aims to meet the extraordinary demand for Nvidia's AI factories, with plans to build 5 gigawatts of AI factories by 2030, and this investment will accelerate that process, further solidifying Nvidia's leadership in the AI sector.
- Liquidity Crisis Concerns: While Nvidia's investment is seen as support for CoreWeave, critics note that CoreWeave may be facing cash flow shortages and debt burdens, suggesting that Nvidia's investment could be a move to mitigate the risk of its partner's potential bankruptcy.
- Market Outlook Analysis: As AI technology rapidly evolves, Nvidia's investment is not only a lifeline for CoreWeave but also a strategic positioning within the entire AI ecosystem, reflecting the company's forward-thinking approach in future market competition.
See More
NVIDIA Invests $2 Billion in CoreWeave to Boost AI Infrastructure
- Investment Scale: NVIDIA announced a $2 billion investment in CoreWeave, purchasing shares at approximately $87 each, reflecting a 6.5% discount from Friday's closing price, aimed at supporting CoreWeave's expansion of AI data center infrastructure to meet growing market demand.
- Market Reaction: Following the announcement, CoreWeave's shares surged over 10%, indicating a positive market response to NVIDIA's investment and reflecting investor optimism regarding the demand for AI infrastructure.
- Strategic Significance: NVIDIA's investment not only supports CoreWeave but also signifies its long-term strategic positioning in the AI sector, with plans to build 5 gigawatts of AI factories by 2030 to address future technological needs.
- Risk Consideration: While the investment is seen as a support for CoreWeave, analysts express concerns that NVIDIA may be overly reliant on CoreWeave financially, especially as it faces liquidity crises and debt pressures, which could impact NVIDIA's long-term investment returns.
See More
USA Rare Earth Shares Volatile Amid Policy Announcements
- Stock Volatility: USA Rare Earth (USAR) shares fell 8.4% to $23.50 today, primarily influenced by the Vice President's announcement of a trading bloc, despite the plan seemingly favoring the company.
- Policy Context: President Trump's 'Project Vault' aims to stockpile $12 billion worth of critical industrial materials, which initially boosted stock prices, but the market remains cautious about its long-term implications.
- Market Concerns: Investors are worried that the newly established price controls could lead to declining rare earth prices, weakening the company's pricing power and impacting future profitability.
- Production Outlook: Despite the policy uncertainties, USA Rare Earth still expects to begin production of much-needed magnets later this year, indicating the company's long-term potential in critical mineral resources.
See More
U.S. Intensifies Competition in Critical Minerals Sector
- Critical Minerals Strategy: The U.S. government has prioritized critical minerals as a national security issue, launching a strategic stockpile initiative called 'Project Vault' aimed at enhancing supply chain control for electric vehicles and defense systems, thereby elevating the nation's position in global competition.
- Geopolitical Implications: The intensifying competition between the U.S. and China in the critical minerals sector, particularly in rare earths where China holds about 70% of the global market share, necessitates increased U.S. focus on countries like Colombia, Mexico, and Venezuela to secure resource supply chains.
- Market Volatility Expectations: While the market has largely shrugged off geopolitical tensions, investors remain optimistic about fiscal stimulus and strong earnings growth, anticipating continued volatility, especially in the critical minerals and alternative investment sectors.
- Investment Opportunities: Following the surge in rare earth mining stocks due to the critical minerals stockpile announcement, investors are encouraged to directly invest in commodities rather than related companies to achieve purer market exposure, indicating a growing interest in mining and alternative investments.
See More
