MP Materials MP is emerging as a critical player in the United States’ push to rebuild a domestic rare earth supply chain, a mission now backed by the U.S government and industry heavyweights. The company’s recent partnerships with the U.S. Department of Defense (DoD) and Apple AAPL underscore its strategic significance and long-term growth potential.
On July 10, the company secured a multibillion-dollar investment and long-term commitments from DoD. The funding will support the construction of its second domestic magnet manufacturing facility (the 10X Facility). Slated to begin commissioning in 2028, it will take MP Materials’ total U.S. rare earth magnet manufacturing capacity to an estimated 10,000 metric tons. Under the 10-year agreement, DoD has established a price floor commitment of $110 per kilogram for MP Materials’ products stockpiled or sold, protecting them from market volatility. Also, DoD has committed that 100% of the magnets produced at the 10X Facility will be purchased by defense and commercial customers for 10 years, ensuring stable and predictable cash flow.
Complementing this, MP’s July 15 agreement with Apple marks a transformative milestone in the clean-tech value chain. Under this deal, MP will supply Apple with rare earth magnets made entirely from recycled materials, leveraging five years of joint R&D to meet Apple’s sustainability and quality standards.
Together, these partnerships highlight MP’s unique role as the only fully integrated rare earth producer in North America, spanning mining, separation and magnet manufacturing. Backed by these, MP Materials’ shares have gained 135.1% since July, outperforming the industry’s 9.8% growth, the Zacks Basic Materials sector’s 6.8% rise and the S&P 500’s gain of 8.7%.
MP Stock’s Performance Against Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Peers in the rare earths space, like Lynas Rare Earths Limited LYSDY and Energy Fuels UUUU, have advanced 143.7% and 229%, respectively, reflecting renewed investor optimism in the sector.
MP’s Performance vs. Energy Fuels & Lynas
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MP stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company’s financial health and long-term prospects.
Image Source: Zacks Investment Research
While this rally may tempt investors, it is important to assess the company’s growth prospects and potential risks before making any investment decision.
MP’s Mixed Q2: Solid Production, Ongoing Operating Losses
The company produced 597 metric tons of neodymium in the second quarter, a 119% surge from the year-ago quarter. Production volumes continue to increase with further progress on process optimization and ramp-up. REO production increased 45% to 13,145 metric tons on higher recoveries from the continued implementation of Upstream 60K optimizations.
Revenues surged 84% year over year to $57.4 million. However, despite the top-line growth, MP reported an adjusted loss of 13 cents per share due to higher costs of sales and selling, general, and administrative expenses (SG&A). However, it came in narrower than the year-ago quarter’s loss of 17 cents per share.
Notably, the company’s strategy of producing and selling more separated products at Mountain Pass and the ramp-up of output of magnetic precursor products are expected to lead to higher costs this year. SG&A expenses are expected to remain elevated due to the expansion of its workforce to support downstream growth.
MP Earnings Estimates Witness Downward Revisions
The consensus estimate for 2025 earnings for MP Materials is currently pegged at a loss of 28 cents per share. The estimate for 2026 stands at earnings of 91 cents per share, implying a potential turnaround.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MP’s fiscal 2025 and 2026 earnings has moved down over the past 60 days, as shown in the chart below.
Image Source: Zacks Investment Research
MP Materials Stock Trades at a Premium
MP is trading at a forward 12-month price/sales multiple of 24.01X, a significant premium to the industry’s 1.46X. The company’s Value Score of F suggests that the stock is not so cheap and indicates a stretched valuation at this moment. Energy Fuels is trading at a loftier 38.63X while Lynas is relatively cheaper at 19.33X.
Image Source: Zacks Investment Research
MP Materials’ Strategic Positioning Supports Long-Term Value
MP Materials operates the Mountain Pass Rare Earth Mine and Processing Facility, the only rare earth mining and processing site of scale in North America. With U.S. policy increasingly prioritizing rare earth independence, MP’s vertically integrated operations and government-backed expansion plans position it at the center of this critical supply chain.
Our Final Take on MP Stock
MP Materials’ rapid expansion, exclusive partnerships and unmatched U.S. supply-chain presence make it one of the most strategically important rare earth players globally. Investors holding MP shares should continue to do so to benefit from the solid long-term fundamentals of rare earth products. However, considering its premium valuation and the expected loss for the current year, accompanied by downward estimate revision activity, new investors can wait for a better entry point. MP Materials currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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