MP Materials Soars 6.3% on Pentagon Funding and Production Surge – What’s Next?

Summary
• MP Materials (MP) surges 6.35% to $72.195, hitting an intraday high of $72.90
• Pentagon commits $400M in funding, guaranteeing a $110/kg price floor for neodymium/praseodymium
• Q2 NdPr production jumps 120% to 597 metric tons, with 10-20% sequential growth expected

MP Materials has ignited a rare earths rally, driven by a $400M Pentagon funding commitment and a 120% surge in neodymium/praseodymium (NdPr) production. The stock’s 6.35% intraday gain reflects a confluence of geopolitical demand, institutional backing, and operational momentum. With the stock trading near its 52-week high of $82.50, investors are weighing the sustainability of this breakout against technical indicators and sector dynamics.

Pentagon Funding and Production Surge Ignite Rare Earths Optimism
MP’s 6.35% surge stems from a $400M funding commitment from the U.S. Department of Defense, which guarantees a $110/kg price floor for NdPr—nearly double Chinese market levels. This ensures stable pricing for MP’s critical materials, essential for defense and clean energy technologies. Simultaneously, Q2 NdPr production surged 120% to 597 metric tons, with management forecasting 10-20% sequential growth. Analysts at TD Cowen highlighted a 40% EBITDA beat driven by upstream volumes and magnetics output, while DA Davidson noted the company’s EBITDA-positive Stage III operations and Apple-funded expansion of Texas’s Independence mine. These catalysts have positioned MP as a geopolitical linchpin in the U.S. rare earths supply chain.

Other Industrial Metals & Mining Sector Gains Momentum as MP Leads
The Other Industrial Metals & Mining sector is rallying alongside MP’s breakout, with sector leader USA Rare Earth (USAR) up 3.71% on the day. MP’s production gains and Pentagon funding align with broader sector trends, including Trump’s CHIPS Act revisions to secure critical minerals and deep-sea mining initiatives. While USAR and TMC (TMC) also trade higher, MP’s unique position as the sole U.S. rare earths miner—coupled with its $500M Apple deal and EBITDA-positive magnetics—has created a distinct tailwind. The sector’s 16.23% 1M return contrasts with the S&P 500’s 0.52% gain, underscoring rare earths’ strategic importance.

High-Leverage Calls and Gamma-Driven Bets for MP’s Breakout
• 200-day MA: $29.90 (well below current price); RSI: 54.9 (neutral); MACD: 4.70 (bullish divergence)
• Bollinger Bands: Upper $79.09 (near-term resistance), Middle $68.88 (key support), Lower $58.67 (oversold threshold)

MP’s technicals suggest a continuation of the rally, with the 52-week high of $82.50 as the next target. The stock is trading above its 30D MA ($65.67) and 100D MA ($38.31), indicating strong momentum. For options, two contracts stand out:

• MP20250829C70 (Call, $70 strike, 8/29 expiry):
- IV: 71.09% (moderate)
- Delta: 0.6587 (moderate sensitivity)
- Theta: -0.5943 (high time decay)
- Gamma: 0.0611 (high sensitivity to price swings)
- Turnover: $992,266 (liquid)
- Leverage: 20.04% (high)
- Payoff at 5% upside ($75.77): $5.77/share
• MP20250829C72 (Call, $72 strike, 8/29 expiry):
- IV: 73.24% (moderate)
- Delta: 0.5282 (moderate sensitivity)
- Theta: -0.5489 (high time decay)
- Gamma: 0.0644 (high sensitivity to price swings)
- Turnover: $358,981 (liquid)
- Leverage: 28.29% (high)
- Payoff at 5% upside ($75.77): $3.77/share

Aggressive bulls should prioritize MP20250829C70 for a 5% upside target, while MP20250829C72 offers a safer entry if the stock consolidates near $72. Both contracts benefit from high gamma and moderate IV, making them ideal for a short-term rally.

Backtest MP Materials Stock Performance
The backtest of Microsoft (MSFT) performance after an intraday surge of 6% shows positive short-to-medium-term gains, with the 3-Day win rate at 51.25%, the 10-Day win rate at 54.76%, and the 30-Day win rate at 54.92%. The maximum return during the backtest period was 14.16% over 30 days, indicating that MSFT can maintain upward momentum after a significant intraday increase.

MP Materials at Inflection Point: Pentagon and Apple Backing Fuel Rare Earths Breakout
MP’s rally is underpinned by structural demand from the Pentagon and Apple, with production gains and EBITDA-positive operations reinforcing its growth trajectory. The stock’s 6.35% surge reflects a shift in rare earths dynamics, positioning MP as a geopolitical and industrial linchpin. Investors should monitor the 52-week high of $82.50 and key support at $68.88. Sector leader USA Rare Earth (USAR, +3.71%) highlights the broader sector’s momentum. For a continuation, watch for a break above $72.90 (intraday high) and confirm volume above 7.35M. Aggressive bulls may consider MP20250829C70 for a 5% upside target, while a breakdown below $68.16 (intraday low) could trigger a retest of the 30D MA at $68.16.