MP Materials Plummets 7.4% Amid Strategic Expansion and Geopolitical Tensions – What’s Next?

Summary
• MP Materials (MP) plunges 7.4% intraday to $58.66, a sharp reversal from its $65.24 high
• Pentagon’s $400M preferred stake and Saudi joint venture announced this week
• 52-week high of $100.25 now 30% below current price amid sector-wide volatility

MP Materials, the U.S. rare earths leader, is trading in a volatile range as investors weigh the implications of its strategic partnerships with the Pentagon and Saudi Arabia. The stock’s 7.4% intraday drop reflects mixed market sentiment toward its ambitious expansion plans, while the Industrial Metals sector grapples with geopolitical supply chain dynamics. With a turnover of 8.46 million shares and a dynamic PE of -82.08, the stock’s technicals and fundamentals are under intense scrutiny.

Strategic Expansion and Geopolitical Tensions Drive Volatility
MP Materials’ sharp decline stems from a combination of strategic overreach and market skepticism. The company’s recent announcements—a $400 million Pentagon investment, a Saudi joint venture with Maaden, and a $500 million Apple partnership—have positioned it as a critical player in U.S. rare earth independence. However, the market is reacting to the scale of capital commitments and the geopolitical risks inherent in these ventures. The Pentagon’s guaranteed minimum price of $110/kg for NdPr, while a floor, contrasts with the stock’s 37% drop from its October peak. Meanwhile, the Saudi joint venture’s 49% stake for MP and the U.S. government’s oversight raise questions about long-term profitability versus national security priorities. High turnover (6.3% of float) and a negative MACD (-3.17) suggest profit-taking and short-term bearish momentum.

Industrial Metals Sector Volatile as MP Materials and USAR Face Pressure
The Industrial Metals sector is in turmoil, with MP Materials’ -7.4% move mirroring the broader trend. Sector leader USA Rare Earth (USAR) has plummeted 10.21%, reflecting shared pressures from geopolitical supply chain shifts and capital-intensive projects. While MP’s partnerships with the Pentagon and Saudi Arabia aim to diversify supply chains, rivals like USAR are struggling to secure similar government backing. The sector’s exposure to U.S.-China tensions and the push for domestic production are amplifying volatility, with investors prioritizing short-term execution risks over long-term strategic value.

Options Playbook: Capitalizing on MP Materials’ Volatility
• RSI: 48.34 (neutral), MACD: -3.17 (bearish), 200D MA: $45.12 (below price)
• Bollinger Bands: Price at $58.85, 30D support at $64.09, 200D support at $23.56
• High turnover (8.46M) and negative sentiment suggest short-term bearish bias

Top Options Picks:
1. MP20251128P58 (Put):
- Strike: $58, Expiry: 2025-11-28, IV: 74.63%, Leverage: 25.58%, Delta: -0.424, Theta: -0.0249, Gamma: 0.0568, Turnover: $18,675
- IV (high volatility), Leverage (moderate), Delta (moderate bearish), Gamma (high sensitivity), Turnover (liquid)
- This put option offers a 142.72% price change potential if MP breaks below $58, leveraging high IV and moderate delta for a bearish play.
2. MP20251128P59 (Put):
- Strike: $59, Expiry: 2025-11-28, IV: 71.93%, Leverage: 21.79%, Delta: -0.483, Theta: -0.0043, Gamma: 0.0599, Turnover: $38,730
- IV (high), Leverage (moderate), Delta (strong bearish), Gamma (high), Turnover (liquid)
- With a 114.29% price change potential, this put benefits from high gamma and IV, ideal for a sharp decline in MP’s price.
Payoff Estimation (5% downside to $55.91):
- MP20251128P58: $2.13 gain per contract (58.85 → 55.91)
- MP20251128P59: $3.14 gain per contract (58.85 → 55.91)
Aggressive bears should target MP20251128P59 into a breakdown below $59.00.

Backtest MP Materials Stock Performance
Key findings• A total of 32 trading days since 2022-01-01 saw MP Materials (MP.N) drop by 7 % or more from the previous close. • The typical knee-jerk reaction fades quickly: the median close-to-close loss on the first day after the plunge is only -0.1 %, and the win-rate hovers near 47 %. • From day 4 onward the stock generally recovers. By day 10 the average gain is +2.7 %, and by day 30 it rises to +8.7 %. None of the point estimates are statistically significant at the 5 % level, but the 30-day drift is economically meaningful versus the benchmark’s +4.7 %. • Risk-adjusted, buying the dip has not been a sure-fire trade, yet it has delivered positive expectancy over a one-month horizon.Parameter notes1. Intraday plunge definition – The user requested “-7 % intraday plunge”. Intraday data are not available in the current tool suite, so the closest proxy—daily close-to-close return ≤ -7 %—was used. 2. Event window & back-test period – Defaulted to 30 trading days after each plunge, covering 2022-01-01 through 2025-11-20, matching “2022 to now”.The interactive report is embedded below.Use the interactive panel to explore the detailed event-study metrics, drill down into individual episodes, and visualise cumulative abnormal returns.

MP Materials at a Crossroads: Strategic Moves or Market Overreaction?
MP Materials’ 7.4% intraday drop underscores the market’s skepticism toward its capital-intensive expansion plans, despite its pivotal role in U.S. rare earth independence. The stock’s technicals—negative MACD, neutral RSI, and a 52-week low of $15.56—highlight the urgency for a rebound above $61.06 (middle Bollinger Band). Meanwhile, sector leader USA Rare Earth’s -10.21% plunge signals broader industry fragility. Investors should monitor the 200D MA ($45.12) as a critical floor and the Pentagon’s $110/kg NdPr guarantee as a potential catalyst. Aggressive bulls may consider MP20251128C63 into a rebound above $63.00, while bears should watch for a breakdown below $58.00.