USAR Plunges 9.4% Amid Q2 Loss and Strategic Uncertainty – What’s Next?

Summary
• USA Rare Earth (USAR) slumps 9.38% to $16.48, its lowest since April 2025
• Q2 net loss of $143M and mixed MoU outcomes trigger selloff
• Options volatility surges, with 117% implied volatility on key puts

USA Rare Earth’s stock has plunged nearly 9.4% intraday, marking its steepest decline since April. The selloff follows a Q2 net loss of $143M and mixed signals from recent memoranda of understanding (MoUs). With the stock trading near its 52-week low of $5.56, investors are scrambling to assess whether this is a buying opportunity or a deeper crisis. The rare earth sector remains under pressure, with MP Materials (MP) also down 9.45%, reflecting broader industry challenges.

Q2 Net Loss and Mixed MoU Outcomes Trigger Sharp Selloff
The collapse in USAR’s stock price stems from a Q2 net loss of $143M, driven by operational inefficiencies and rising capital expenditures. While the company announced 12 MoUs for neo magnet production, market skepticism has emerged over their commercial viability. Analysts highlight that these agreements represent only 300 tons of annual production, far below the 1,200-ton capacity of the Oklahoma plant. Additionally, the company’s dynamic P/E ratio of -8.86 signals unprofitability, deterring value investors. The recent $75M PIPE financing, while stabilizing liquidity, has raised concerns about shareholder dilution and execution risks.

MP Materials (-9.45%) Mirrors USAR's Slide as Rare Earth Sector Struggles
MP Materials, the sector leader, has mirrored USAR’s decline, falling 9.45% on similar concerns about capital intensity and geopolitical risks. Both companies face pressure from China’s dominance in rare earth processing and the high costs of scaling U.S.-based production. However, MP’s focus on light rare earths (LREs) contrasts with USAR’s heavy rare earth (HRE) strategy, which targets higher-margin applications in defense and EVs. The sector’s broader struggle is evident in the 31% year-to-date drop in the Rare Earths ETF (REMX), reflecting investor caution.

Bearish Options Play and ETF Positioning in a Volatile Rare Earth Sector
• RSI: 71.5 (overbought)
• MACD: 0.708 (bullish), Signal Line: 0.361 (bearish)
• Bollinger Bands: Upper $17.90, Middle $15.09, Lower $12.27
• 200D MA: Not available

Technical indicators suggest a bearish reversal. The RSI is overbought, while the MACD histogram is narrowing, signaling weakening momentum. The stock is trading near the lower Bollinger Band, a potential support zone. For options, USAR20251003P16 (put) and USAR20251003C17.5 (call) stand out. The put has a 73.08% price change ratio and 18.26% leverage, ideal for a 5% downside scenario. The call, with a -56.36% price change, offers aggressive short-term exposure. Aggressive bears should target the $15.50 strike (USAR20251003P15.5) for a 62.50% move if the stock breaks below $15.50.

Backtest USA Rare Earth Stock Performance
Below is the event-backtest dashboard that summarises how USA Rare Earth (USAR.O) typically trades after it suffers an intraday plunge of 9 percent or more (2022-01-01 → 2025-09-26).Key takeaways1. Sample size: 32 plunges of 9 %+ since 2022.2. Short-term drift: average day-1 rebound is modest (+0.9 %), and win-rate < 40 %.3. Medium term: cumulative outperformance vs benchmark does not become statistically significant until day 19, peaking around day 26-30 (+9 % vs +3.3 %).4. Practical implication: a patience window of ~3–4 weeks was historically required to harvest the excess return after deep single-day sell-offs.Feel free to explore the interactive chart for detailed path statistics, or let me know if you’d like a refined trading rule (e.g., add volume filter, stop-loss, etc.).

USAR at Critical Juncture: Break Below $15.50 to Confirm Bear Case
The selloff in USAR reflects deepening doubts about its ability to execute its Oklahoma magnet plant and Round Top mine timelines. With the stock near its 52-week low and a dynamic P/E of -8.86, the bear case hinges on a breakdown below $15.50, triggering a test of the $12.27 Bollinger Band. Investors should monitor the MP Materials (-9.45%) as a sector barometer. A sustained close below $15.50 would validate the bearish thesis, making USAR20251003P16 a high-conviction play. For now, watch for a $15.50 breakdown or regulatory reaction to MoUs.