MP Materials: Unlocking Value in a Critical, Undervalued Rare Earth Play

Let's talk about a stock that's not just riding the tailwinds of geopolitics but is actively reshaping the U.S. industrial landscape: MP Materials (MP). In a world where rare earth elements (REEs) are the new oil-critical for everything from electric vehicles to hypersonic missiles-MP Materials has positioned itself as the linchpin of America's bid to break free from China's stranglehold on the supply chain. And with the U.S. Department of Defense now its largest shareholder, this isn't just a story about commodities-it's a strategic investment in national security.

Strategic Positioning: The DoD's $400M Bet and a Price Floor That Guarantees Stability

MP Materials' recent partnership with the DoD is nothing short of transformative. In July 2025, the Pentagon led a $400 million preferred stock investment, securing a 15% stake in the company and locking in a 10-year price floor of $110 per kilogram for neodymium-praseodymium (NdPr) oxide-nearly double the market rate, according to a ProcurementMag article. This isn't just a financial lifeline; it's a masterstroke of industrial policy. By guaranteeing revenue, the DoD has turned MP into a near-risk-free play in a sector plagued by volatility.

But the DoD didn't stop there. It's also underwriting a $150 million expansion of MP's Mountain Pass mine to boost rare earth separation capabilities and a $1 billion loan to build the 10X Facility, which will triple magnet production to 10,000 metric tons annually (as reported in ProcurementMag). And here's the kicker: the DoD has agreed to buy 100% of the magnets produced for the next decade, covering both defense and commercial applications (per the GlobeNewswire projection). This is the kind of long-term certainty that turns speculative plays into blue-chip investments.

Financial Turnaround: From Bleeding Cash to a $2 Billion Cash Hoard

MP's financials tell a tale of resilience. In 2023, the company faced a 52% revenue drop and a 92% plunge in net income, according to MP's 2023 results. But 2025 is a different story. Q2 2025 results showed NdPr oxide production surging 119% year-over-year to 597 metric tons, driving revenue up 84% to $57.4 million, according to a Forbes analysis. While the company still sports a $53.5 million net loss year-to-date, its balance sheet is now bulletproof: $2 billion in cash reserves (reported in that same Forbes analysis).

The Apple partnership is another game-changer. A $500 million magnet supply agreement-complete with upfront payments-has funded the expansion of MP's Independence facility in Texas and a recycling line at Mountain Pass (reported in the Forbes analysis). This isn't just about selling magnets; it's about building a vertically integrated empire that captures value at every stage, from mining to magnet manufacturing.

Market Dynamics: A $14.7 Billion Rare Earth Boom by 2032

The global rare earth market is on fire. By 2032, it's projected to hit $14.7 billion, growing at a 10.6% CAGR, according to the Mordor Intelligence report. Defense applications alone are expected to expand from $3.95 billion in 2024 to $6.28 billion by 2030 at an 8.6% CAGR, per the GlobeNewswire release. Why? Because REEs are the unsung heroes of modern warfare. Neodymium-iron-boron (NdFeB) magnets are essential for missile guidance systems, radar arrays, and secure communications hardware. With China controlling 60% of global production and 90% of refining, diversifying supply chains isn't just prudent-it's imperative, as noted in the Mordor Intelligence report.

MP's decision to halt rare earth concentrate exports to China and focus on U.S. downstream processing is a stroke of genius. By stockpiling concentrate and ramping up oxide production, MP is positioning itself to capitalize on the inevitable price spikes as demand outstrips supply (per MP's 2023 results). And with JPMorgan and Goldman Sachs on board to fund the 10X Facility, the company has the firepower to scale faster than any competitor (reported in the ProcurementMag article).

Risks and Rewards: Is MP Overvalued?

Let's not sugarcoat it: MP is a high-growth, capital-intensive play. At 45 times forward revenue, the stock isn't cheap. And while the DoD and Apple partnerships provide stability, profitability remains a distant goal. The company's Q3 2025 net loss of $30.9 million underscores the execution risks (reported in the Forbes analysis). But here's the rub: in a sector where geopolitical tailwinds are stronger than gravity, patience is a virtue.

MP's real value lies in its strategic moat. The DoD's price floor and guaranteed purchases create a revenue stream that's immune to market fluctuations. Meanwhile, the Apple deal ensures steady demand for high-margin magnet products. And with the U.S. government now a 15% shareholder, MP isn't just a company-it's a national asset.

Conclusion: A No-Brainer for the Long-Term Investor

MP Materials isn't just a rare earth play-it's a geopolitical play. By aligning with the DoD, Apple, and the broader U.S. industrial strategy, MP has secured a front-row seat in the race to decouple from China's supply chain. While short-term profitability is a concern, the long-term outlook is unassailable. For investors willing to ride the wave of U.S. reindustrialization, MP Materials offers a rare combination of strategic inevitability and explosive growth potential.