MP Materials (MP 3.74%) stock has been soaring. Shares of the U.S.-based rare earth materials and magnets company rose a whopping 308% from the end of 2024 through Aug. 1, 2025.
As is usually the case when a stock produces dramatic gains, investors want to know whether it can continue climbing. The U.S. government's push to end reliance on foreign producers of rare earth metals is an obvious tailwind, but a lot of expectations are already baked into the stock's soaring price.
Let's weigh the opportunities in front of this stock against some of the challenges it faces to see whether it can be expected to continue moving in the right direction.
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Why MP Materials stock is way up this year
Manufacturers of lasers, semiconductors, and smartphones increasingly rely on a group of 17 metals known as rare-earth elements. Over the past decade, China has been the dominant supplier, accounting for over 70% of U.S. rare earth imports in seven of the past 10 years.
On July 10, MP Materials announced a partnership with the U.S. Department of Defense (DoD) to accelerate production of magnets made from rare earth metals. The deal includes a multibillion-dollar package of investments from the DoD to build a second domestic magnet manufacturing facility.
The new facility, to be named the "10X Facility," doesn't have a location yet. With plenty of resources to make it happen, though, MP Materials expects the 10X Facility to begin commissioning in 2028. Once online, management thinks it can raise total manufacturing capacity to 10,000 tons annually. To put this figure into perspective, total rare earth metal imports to the U.S. reached 13,600 tons last year.
The U.S. government isn't the only enormous entity eager to diversify its rare earth magnet sources. On July 15, MP Materials announced a $500 million deal with Apple to provide magnets produced by its facility in Fort Worth, Texas. Shipments to Apple are expected to begin in 2027.
Reasons to remain cautious
China does not produce a majority of the world's rare earth metals because it's blessed with ore deposits that don't exist elsewhere. It's the leading producer because it invested heavily in big processing facilities that America lacks. MP Materials' mine in Mountain Pass, California, produces heaps of rare earth oxide, but the company processes very little of it into metal that can be used to make magnets.
MP Materials' deal with Apple doesn't involve processing ore dug up at its Mountain Pass mine. Under the agreement, the feedstock MP Materials will use to manufacture magnets for Apple will come from recycled post-industrial and end-of-life magnets. It's better than nothing, but this deal won't do much to improve the company's ore processing capability.
Unfortunately, MP Materials didn't get time to build up its ore processing capacity before President Donald Trump's tariffs hammered demand for the ore its Mountain Pass facility produces. The company ceased shipments of rare earth concentrate to China in April.
Sales of rare earth concentrate to Shenghe Resources, a Chinese processor, were responsible for about 70% of MP Materials' total revenue in 2024 and about 50% of revenue in the first quarter of 2025.
MP Materials wasn't exactly on firm financial footing before it stopped shipping ore to China this April. During the 12 months ended this March, its operation lost $166 million.
One for the watchlist
It's hard to overstate just how high expectations are for MP Materials' underlying business. Price-to-sales ratios for basic materials companies typically live in low-single-digit territory. Shares of MP Materials have been trading for over 48 times trailing sales. If shipments to China don't resume soon, roughly half of total revenue could disappear until the 10X Facility is up and running.
The DoD has agreed to a price floor of $110 per kilogram of neodymium and praseodymium (NdPr) processed at the still non-existent 10X Facility. Even if MP Materials can get that facility built in a couple of years and begin producing 10,000 tons of NdPr at it annually, annual revenue from the DoD would work out to roughly $1.1 billion. This isn't enough to justify MP Materials' present market cap of about $10.4 billion.
If the 10X facility were already processing 10,000 tons of rare earth metal annually and selling it to the government, I'd call this stock a buy. Unfortunately, MP Materials still doesn't even know where it will build the 10X Facility. With heaps of execution risk and a trade-war-driven revenue reduction on the way, it's probably best to keep this stock on a watchlist.
