Shares of rare earth materials and magnets company MP Materials (MP 20.40%) rose by 113.3% in the first half of 2025, according to data from S&P Global Market Intelligence. That's exciting enough, but it doesn't tell anything like the whole story of a stock that's front and center in some of the most hotly debated political issues -- namely, the strategic necessity for the U.S. to reduce dependence on China for rare earth materials critical for the modern economy, including defense equipment.
MP Materials stock in 2025
Indeed, while the stock is up 113% by the end of June, it has increased by 211% year to date as of the time of my writing, and this growth hasn't been linear.
The long-term bull case for the stock rests on the idea that U.S. administrations will aim for rare earth material independence from China, and MP Materials, a company that operates the only rare earth and processing facility, at Mountain Pass in California, , will be a key part of the process.
On the flip side, the trade conflict with China is a near-term negative for the company's earnngs, given that the company currently sells the "vast majority" of its rare earth concentrate to a Chinese company, according to its SEC filings.
As such, the stock has bounced around this year, sometimes soaring on speculation that the U.S. would aggressively pursue rare earth independence, and sometimes crashing on the basis that the trading relationship with China had improved throughout the year and the country would indeed resume delivering rare earth materials to the United States.
However, as previously noted, there's no reason the Trump administration couldn't decide to pursue a parallel track of encouraging domestic rare earth materials supply while continuing to buy from China.
Image source: Getty Images.
What happened to MP Materials' stock
The good news is that the administration did decide to pursue a parallel track, with the Department of Defense (DoD) recently signing a deal for the following:
- There is a guaranteed price floor of $110 per kilogram for rare earth products.
- Following the construction of a second magnet manufacturing facility, the "10X Facility," the DoD will ensure that defense and commercial customers will purchase all magnets produced by 10X.
- The DoD will acquire $400 million in convertible stock, positioning itself to own 15% of the company.
- MP Materials will receive a $150 million loan from the DoD to expand capacity at Mountain Pass and has received commitments from JPMorgan and Goldman Sachs to provide $1 billion in financing for 10X.
The latest update is good news for MP Materials. Still, it's far from certain how this will play out over the long term, and the key decisions are being made by a relatively small number of people who are heavily influenced by political considerations. As such, it's hard to argue that retail investors have any edge in long-term investing in this stock.
