Stock of Rare Earths in the USA Experienced a Setback Today
In a significant development for the rare earth industry, MP Materials has secured a competitive edge over its counterpart, USA Rare Earth, in terms of financial viability and profitability.
## **MP Materials: A Steady Climb**
MP Materials, the only U.S. rare earth mine operator, reported a revenue of over $200 million last year and anticipates a 30% growth in 2022. The company's strategic moves have been paying off, with a 10-year deal with the Pentagon to buy rare earth magnets at guaranteed prices and a separate $500 million partnership with Apple. Last week, MP Materials signed a $400 million investment deal with the U.S. Department of Defense, further bolstering its financial stability.
## **USA Rare Earth: Challenges Ahead**
USA Rare Earth, on the other hand, has faced significant hurdles. The company reported an operating loss of $8.7 million in Q1 2025, marking an 85% increase from the prior year. Despite a recent surge in its stock price, USA Rare Earth collected zero dollars, zero cents in revenue last year, and remains unprofitable. The company's business model is heavily dependent on U.S.-China trade dynamics, which can be volatile, and lacks a domestic refining network.
## **Comparing the Two**
MP Materials' strategic partnerships and domestic production capabilities have positioned it favourably compared to USA Rare Earth. The company's deal with the Pentagon provides a price floor for its products, reducing market risk and enhancing its financial stability. In contrast, USA Rare Earth faces significant challenges in achieving profitability without a clear revenue stream or domestic refining capabilities.
The financial viability of MP Materials is further enhanced by its public-private partnership, which provides substantial funding and reduces market risks. USA Rare Earth, however, remains vulnerable due to its dependence on external factors. Adjusted profits for USA Rare Earth are expected in 2028, but no date has been set for a GAAP profit.
As of 1:55 p.m. ET Wednesday, USA Rare Earth's stock is down 7.1%, reflecting investor uncertainty about its future financial performance. MP Materials, on the other hand, continues to make steady progress, with expectations of nearly doubling its revenue in 2026.
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- MP Materials, through strategic partnerships with technology giants like Apple and government entities such as the Pentagon, has been investing heavily into the rare earth industry, with a $500 million partnership and a $400 million investment deal, which significantly improves its finance and financial stability.
- In contrast, USA Rare Earth, despite a recent surge in its stock price, is yet to generate any revenue, indicating a struggle in the finance and profitability department, due to its heavy dependence on U.S.-China trade dynamics and lack of domestic refining capabilities.
- The finance sector closely monitors the rare earth industry, with MP Materials' impressive financial viability and growth prospects standing out, while USA Rare Earth's ongoing challenges in achieving profitability raise concerns among investors, as reflected by the 7.1% drop in its stock price.
