By Contributor,Thomas Fuller,Trefis Team

Copyright forbes

CANADA – 2025/09/28: In this photo illustration, the MP Materials logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images

MP Materials (NYSE:MP) is an American rare-earth materials firm based in Las Vegas, Nevada, and experienced an increase of nearly 8% during Thursday’s trading. The recent upturn follows plans by the Trump Administration to obtain a 10% equity stake in the miner Lithium Americas. Reports have emerged suggesting the government might be looking to take equity interests in the mineral supply chain that is vital to U.S. interests, potentially involving companies such as MP Materials. While MP Materials secured a contract with the Department of Defense in July, it seems there could be additional agreements forthcoming.

The stock has performed exceptionally well this year, with an approximate increase of 370% year-to-date. The company is the proprietor of the Mountain Pass mine, currently the sole operational rare earth mine and processing facility in the United States. Its main objective is to produce Neodymium-Praseodymium (NdPr), essential rare earth elements utilized in high-strength permanent magnets for electric vehicle motors, wind turbines, drones, and military equipment. Nevertheless, following the recent surge, the stock now trades at over 45 times forward revenue – a significant figure for a mining company. So, what can be anticipated from MP Materials in the future?

What’s Driving The Surge?

Geopolitical tensions have been a significant tailwind. In April, after severe U.S. tariffs on Chinese goods, Beijing established an export-control framework for rare earth materials. By May, China’s rare earth magnet exports had plummeted 74% year-over-year, with shipments to the U.S. allegedly falling by 93%. Although exports from China have recovered somewhat, with August shipments amounting to 6,146 metric tons, an increase of 15.4% compared to the previous year, there remains a pressing need to create a secure domestic supply. This positions MP as a pivotal player in diminishing U.S. dependence on China, which is responsible for 90% of the world’s most powerful rare-earth magnets.

In this context, the U.S. Department of Defense became MP’s largest stakeholder after a $400 million stock acquisition in July, intended to enhance the magnets business and ensure the domestic supply chain. Furthermore, MP entered into a $500 million rare earth magnet supply agreement with Apple, with upfront payments covering a large portion of the costs to enlarge the company’s Independence downstream center for rare earth metal and magnetics production in Texas. Now, as the Trump administration seeks further equity stakes in vital minerals companies, it may provide policy benefits such as expedited permitting, favorable regulations, and the opportunity for enduring supply contracts with organizations like the Department of Defense.

Operations Progress and Earnings

MP is rapidly expanding. Its Q2 2025 exceeded expectations as NdPr oxide production reached record highs in Q2, rising 119% year-over-year, while sales volumes more than tripled to 443 metric tons. Revenue soared 84% to $57.4 million. The management anticipates a further sequential increase in NdPr oxide production of 10% to 20% in Q3. This is remarkable growth. The company has also been advancing downstream, producing permanent magnets, alloys, and finished magnets as part of a strategy toward high-value, high-margin products. Sales for this segment increased to $20 million, and the company aims to scale production to 10,000 metric tons annually by 2028. The strength of the company’s balance sheet is also notable, with nearly $2 billion in cash reserves.

MORE FOR YOU

What Are The Risks?

Despite the considerable momentum, the valuation may be somewhat challenging to defend. Trading at over 45 times forward revenue, MP resembles a hot tech company more than a miner. The business is also currently unprofitable, posting a $53.5 million net loss thus far this year and approximately $126 million in cash burn. While contracts from the U.S. government and corporations offer some stability, the risk associated with execution remains elevated. Chinese suppliers, who still command the majority of the supply, have ample incentive to devise methods around export limitations, and once supply stabilizes or the trade conflict subsides, MP’s strategic edge could lessen. At these multiples, combined with profitability still being a distant goal and a significant dependence on geopolitical tailwinds, the stock appears to be more of a crowded trade than a reliable investment.

The Trefis High Quality (HQ) Portfolio, which comprises 30 stocks, has a history of consistently outperforming its benchmark that includes all three indices – S&P 500, Russell, and S&P midcap – achieving returns exceeding 91% since its launch. Why is this the case? As a collective, HQ Portfolio stocks have offered superior returns with reduced risk compared to the benchmark index; a less erratic investment experience, which is evident in HQ Portfolio performance metrics.

Editorial StandardsReprints & Permissions