Shares of MP Materials, a leading U.S. rare earth elements producer, surged more than 8% on October 10th, extending what has been a remarkable performance throughout the year. The company has delivered a staggering 378% gain since January, propelled by escalating geopolitical friction between the United States and China. This latest price acceleration followed China’s decision to tighten export controls and former President Trump’s vocal criticism of China’s dominant position in critical minerals.
The geopolitical landscape intensified as China moved to strengthen its grip on global supply chains. New regulations now require foreign companies to obtain licenses for exporting products containing 0.1% or more of rare earth elements. This development significantly enhances the strategic importance of MP Materials as America’s sole fully integrated domestic producer of these crucial materials.
Government Backing and Commercial Validation
In a landmark move during July 2025, MP Materials secured a groundbreaking public-private partnership with the U.S. Department of Defense. The billion-dollar arrangement includes a direct capital injection of $400 million, transforming the federal government into the company’s largest shareholder with a 15% stake.
This comprehensive agreement establishes a guaranteed minimum price of $110 per kilogram for the company’s neodymium-praseodymium products over a ten-year period, providing crucial protection against market volatility. Additionally, the Pentagon committed to purchasing the entire magnetic materials output from MP Materials’ planned “10X” production facility, scheduled to commence operations in 2028.
Beyond government support, MP Materials demonstrated its commercial appeal by securing Apple as a long-term partner through a $500 million contract. The technology giant will source recycled magnets from MP Materials, highlighting growing private sector interest in the company’s strategic positioning.
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The company’s Mountain Pass facility in California remains the United States’ only fully integrated rare earth mining and processing operation, complemented by its “Independence” magnetics plant located in Texas.
Valuation Metrics Signal Caution
Despite the impressive rally, traditional valuation indicators suggest investors should proceed with caution. The stock’s price-to-book ratio of 13.7 stands nearly six times higher than the industry average of 2.3. Analysis using a discounted cash flow model indicates an intrinsic value of just $2.33 per share—significantly below current trading levels.
Further concern stems from the company’s negative free cash flow, which reached $260.5 million, though market analysts project a return to positive cash flow by 2027.
Strategic Positioning for Continued Growth
The upcoming November 6th release of third-quarter 2025 earnings will provide critical insights into the company’s operational progress. Among the thirteen experts covering the stock, market researchers maintain an average price target of $78.42, with ten recommending purchase and three advising investors to hold their positions.
Looking ahead to the 2026 midterm elections and continued emphasis on supply chain independence, MP Materials appears well-positioned to benefit from sustained government backing. The convergence of Pentagon support, Apple’s partnership, and Chinese export restrictions creates a uniquely favorable environment for this rare earth specialist.
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