Highlights
- MP Materials has become a critical player in America’s rare earth strategy.
- The company has received substantial investments from the Department of Defense and Apple.
- MP Materials aims to break China’s near-monopoly on rare earth magnets by developing domestic production and recycling capabilities.
- Despite financial challenges and high valuation, MP Materials represents a significant bet on U.S. industrial reindustrialization and technological independence.
In the post-globalization chess match for industrial sovereignty, MP Materials (opens in a new tab) (NYSE: MP) has emerged as America’s queen on the board of rare earths, or as Rare Earth Exchanges (REEx) has referred to as America’s rare earth element treasure trove. After languishing in obscurity for years, the stock has skyrocketed more than 300% in 2025, fueled by historic agreements with both the Department of Defense (DoD) and Apple Inc. REEx credits some very savvy leadership with operational chops, such as co-founders James Litinsky (Chairman & CEO) and Michael Rosenthal (COO). Yet the question on every investor’s mind is: Buy, hold, or sell?
This report dives deep into the fundamentals, geopolitical winds, valuation metrics, and strategic commitments to offer a hard-nosed view of the road ahead.
The Bull Case: A New American Industrial Policy in Action
MP Materials is no longer just a miner—it’s now the nucleus of a state-backed industrial strategy aimed at dethroning China’s rare earth supremacy. With 90%+ of global rare earth magnets currently coming from China, the stakes are nothing short of existential for U.S. supply chains. Here’s why the bulls are roaring:
1. Defense Department Anchor Deal
In an unprecedented move, the Pentagon has:
- Taken a 15% equity stake via $400M in preferred shares,
- Offered a $150M direct loan, and
- Locked ina $110/kg price floor for NdPr magnets—well above China’s subsidized levels—a big deal in this world.
This price floor is a game-changer. It de-risks revenues and insulates MP from Chinese price manipulation, allowing it to scale its magnet supply chain with predictability. It’s also a signal to financiers: Uncle Sam has your back.
2. Apple’s $500 Million Vote of Confidence
Apple is putting its money where its ESG mouth is, committing $500 million to MP, including a $200M prepayment. This isn’t just about supply—Apple is co-developing next-gen magnet tech and rare earth recycling. The message? If the iPhone runs on rare earths, Apple wantsthem American and recycled.
3. A War Chest of Capital
Between the DoD, Apple, and an upsized $650M equity raise, MP has access to over $2.2 billion in fresh capital. Throw in a $1B credit line from JPMorgan and Goldman Sachs, and the company is now an industrial policy darling—something America hasn’t seen in decades.
The Bear Case: Dilution, Execution, and a Sky-High Valuation
While the strategic narrative is potent, savvy investors must confront the hard truths embedded in MP’s financials and market behavior.
1. Fundamentals Are Fragile
- Net income (TTM): -$104.6M
- Profit margin: -48.4%
- Free cash flow (TTM): -$211M
- EV/EBITDA: A staggering 68.4x
MP’s profitability is negative across the board. Operating margins are deeply in the red, and the Price-to-Sales ratio at 47x is wildly inflated—even for a strategic asset. While the company is flush with cash ($759M), it’s burning capital faster than it’s producing value.
2. Dilution Risk Is Real
The recent equity raise diluted existing shareholders, and future capital needs for downstream magnet production and HREE separation could trigger more. With DoD owning preferred shares (convertible), retail shareholders risk being squeezed as federal influence expands.
3. Major Programs, Projects, Timelines, and Deliverables-and Risks
MP Materials faces a formidable execution challenge: scaling its magnet manufacturing capacity more than tenfold to meet Pentagon commitments within just three years, while simultaneously launching a cutting-edge rare earth recycling program in partnership with Apple. The company now has the capital, partners, and political backing to make it happen—but the operational lift is enormous. Coordinating complex supply chains, building new facilities, hiring specialized talent, and delivering at scale on two fronts will test even the most capable leadership teams. While MP has proven execution chops and a track record of moving quickly, the timeline is unforgiving. Success here would cement its role as a national industrial pillar—but the margin for error is razor thin
4. Dependence on China Remains
Until its Texas and California facilities are fully operational, MP continues to ship concentrate to Shenghe Resources, a Chinese partner that holds some stock in the company. This contradiction—selling to China while de-risking from it—underscores the transitional fragility of MP’s current strategy. However, that deal is set to expire next year.
The Competitive Landscape
While MP is the clear frontrunner in the U.S., it doesn’t operate in a vacuum. Key rivals and peers include:
- Lynas Rare Earths (Australia) – backed by U.S. DoD but geographically distant.
- Energy Fuels – expanding into rare earth separation but lacks MP’s scale.
- Noveon and USA Rare Earth – nascent players chasing downstream integration.
The wildcard remains China. With near-total control of the heavy rare earth supply chain, China’s ability to undercut prices and flood markets remains a credible threat. The DoD price floor is a response, but only sustainable if bipartisan political support holds firm, which we suspect it will. But one can never predict the future.
Backing MP Materials—Regardless of Administration
Valuation Snapshot (as of July 28, 2025 before market opening)
| Metric | Value |
| Price | $62.08 |
| Market Cap | $10.99B |
| Trailing P/E | 20.97 |
| Forward P/E | 24.10 |
| Price/Sales | 47.18 |
| Price/Book | 10.61 |
| Short Interest | 17.31% |
| 52-Week Range | $10.02 – $65.05 |
| Beta | 2.26 |
These ratios scream “overbought,” but the political backing and downstream execution story offer a compelling counterbalance.
Verdict: Buy, Hold or Sell?
BUY—If You Believe in the New Industrial Age
For long-term investors who see the writing on the wall—where national security and industrial policy fuse—MP is America’s flagship rare earth play. The price floor alone is a state-sanctioned earnings guarantee. Add Apple’s commitment and you have real offtake plus tech synergy.
HOLD—If You Got In Early
If you were lucky (or smart) enough to buy in at $10–30, hold tight. The political and financial architecture is in place for MP to scale, and you’re riding a secular tailwind.
SELL—If You Can’t Stomach Volatility
This is not a stable earnings compounder—yet. It’s a geopolitically exposed industrial bet. With a high beta and execution risks, any failure in plant delivery, political turnover, or price shock leads to trouble. REEx believes in the leadership of this company as well; they are execution oriented.
Final Word: MP Is More Than a Stock—It’s a Signal
MP Materials has become the bellwether for American reindustrialization. It represents an evolving strategy that blends public money, private execution, and geopolitical hedging in an era where rare earths are no longer rare—but their control is.
Yes, MP may be expensive. But so was every national champion before its country remembered why it mattered.
Rare Earth Exchanges™ Buy/Hold/Sell Rating depends on the scenarios above. (Bias Toward Strategic Accumulation on Pullbacks)
If rare earths are the new oil, MP Materials may well be America’s Aramco—except this time, it’s Uncle Sam, not Riyadh, pulling the levers. To be clear, we don’t offer financial advice, and we’re not suggesting investors chase the stock at any price. But in the spirit of transparency, we believe the long-term fundamentals here are compelling. REEx, remember, was founded with one mission: to accelerate the development of an ex-China rare earth supply chain. MP sits squarely at the center of that effort. If the stock sees a meaningful pullback, it may present a strategic opportunity to accumulate, backed by deep structural tailwinds and federal resolve that will ensue regardless of administration.
Sources: Yahoo Finance, Motley Fool, Washington Examiner, Rare Earth Exchanges analysis, and company SEC filings.
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