USA Rare Earth (USAR -5.04%) went public through a merger with a special purpose acquisition company (SPAC) in March, and the stock has seen volatile trading since. As of close of trading Aug. 11, the company's share price is down roughly 16% since it had its initial public offering (IPO). That means that a $1,000 investment in the stock would now be worth roughly $832.
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USA Rare Earth's business is still in a pre-revenue state, and there's still significant uncertainty when it comes to the outlook for launching and scaling its commercial operations. The company says its mission is to "establish a U.S. rare earth magnet supply chain supporting the future state of energy, mobility, and national security."
The stock has been subject to high levels of valuation volatility across its relatively short history as a publicly traded company. On the other hand, the stock has also seen a strong rally recently -- and its share price is up 60% over the last three months.
What's next for USA Rare Earth?
Charting USA Rare Earth's outlook involves a high degree of speculation and guesswork, but some significant political dynamics seem to be coalescing in the mining specialist's favor. In particular, the stock got a huge boost in April after President Donald Trump signed an executive order to bolster the United States' rare earth mineral sourcing capabilities through expedited permitting.
There's a good chance that the administration will continue to make moves to strengthen the country's mineral mining industry. Along those lines, a recent report from Reuters said that the Trump administration is looking into supporting domestic mineral providers by guaranteeing a base level of pricing for their products.
The U.S. still relies on China for a very large portion of its rare earth mineral sourcing. With tensions running high between the two countries and a high likelihood that both countries will continue making efforts to reduce their reliance on the other, it's probable that the U.S. will continue making some big moves to strengthen its domestic mineral sourcing capabilities. That doesn't guarantee that USA Rare Earth stock will go on to be a massive market beater, but the current political backdrop gives the company a chance to be a big winner.
