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Key Stats for MP Materials Stock
- 1-Day Price Change for MP stock: 50%
- Current Share Price: $45
- 52-Week High: $48
- MP Stock Price Target: $30
What Happened?
MP Materials (MP) stock skyrocketed 50% on Thursday after it announced a landmark $400 million investment from the U.S. Defense Department, making the Pentagon the largest shareholder in America’s only operational rare earth mining company.
The investment will fund the expansion of MP’s rare earth processing capacity and magnet production capabilities at its Mountain Pass facility in California.
The deal represents a significant public-private partnership aimed at reducing U.S. dependence on China for critical rare earth materials used in military weapons systems, including F-35 warplanes, drones, and submarines.
According to the U.S. Geological Survey, the U.S. was almost entirely dependent on foreign countries for rare earths in 2023, with China representing about 70% of imports.
Under the agreement, MP Materials will construct a second magnet manufacturing facility with an annual capacity of 10,000 metric tons, expected to begin commissioning in 2028.
The Pentagon has committed to purchasing 100% of the magnets produced at this new facility for a period of 10 years, while also guaranteeing a minimum price of $110 per kilogram for neodymium-praseodymium oxide (NdPr), a key rare-earth compound used in permanent magnets.
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What the Market Is Telling Us About MP Stock
The massive 50% surge in the mining stock reflects investor enthusiasm about MP Materials securing long-term government backing for its expansion plans, effectively de-risking the company’s growth strategy while providing substantial revenue visibility.
The Pentagon’s investment validates MP’s strategic importance to U.S. national security and provides a competitive moat against Chinese dominance in the rare earth supply chain.
The deal structure is investor-friendly, with CEO James Litinsky emphasizing this is “not a nationalization” but rather a partnership that maintains MP’s status as a publicly traded company.
The Pentagon will hold approximately 15% of MP Materials stock once preferred shares and warrants are exercised, making it the largest shareholder while allowing existing management to retain control.
The guaranteed pricing mechanism provides significant downside protection, with the government covering any shortfall if market prices fall below $110 per kilogram for NdPr.
Meanwhile, MP retains 70% of upside above that price threshold, creating an asymmetric risk-reward profile that strongly favors shareholders.
The deal also comes as rare earths have become a central point of contention in U.S.-China trade disputes, highlighting the strategic value of domestic production capabilities.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
