MP Materials Stock Dips Again. How to Navigate the Chaos.

An aerial view of MP Materials’ Mountain Pass mine. (Courtesy MP Materials)

Key Points

• Rare earth material stocks, including MP Materials, USA Rare Earth, and Ramaco Resources, experienced significant volatility.
• MP Materials stock fell 3.6% to $80.79 on Friday, following a 6.7% drop in the previous session.
• The U.S. Department of Defense invested in MP Materials to secure future supply of rare earth minerals amid escalating trade tensions.

It’s been a wild week for rare earth material stocks. Investors need a chance to catch their breath.

Friday, shares of MP Materials fell for a third day, as their recent epic rally continued to lose steam.

The stock fell 3.6% to $80.79 on Friday, following a 6.7% drop in the previous session. The S&P 500 and the Dow Jones Industrial Average added about 0.5% Friday.

MP and other rare earth stocks surged earlier this week as tensions between the U.S. and China escalated after Beijing said it would tighten export controls on certain rare-earth materials. President Donald Trump hit back by threatening more tariffs.

MP stock traded north of $100 earlier this month before falling back. USA Rare Earth shares have traded near $44 in the past few days, but closed at $27.73 on Friday. Ramaco Resources’ stock ended the week at $45.78, down 7.5%, after hitting almost $58 in recent days.

What shares will do next is anyone’s guess. There is some fundamental basis for their recent gains. China currently dominates the supply chain for the rare-earth materials often used in magnets and crucial components of everything from electric vehicles to F-35 warplanes.

Beijing moved to restrict exports of rare earths earlier this year as trade tensions between the world’s two largest economies escalated. That prompted the Defense Department to invest in MP Materials to help ensure the future supply of the minerals. The deal included a price floor for rare earth materials and a guaranteed customer for any rare earth magnets MP will produce with new capacity.

Higher pricing and more demand are good for any stock. Still, shares of the three were up an average of 323% coming into Friday trading.

Wall Street can help investors navigate the chaos—a little. Of the three, MP and Ramaco stocks are back below analysts’ average price targets. MP’s average target price is about $83 a share. Ramaco’s average target price is just over $46. The average target for USAR stock is about $24, still a little below where shares are trading.

The recent gains and volatility haven’t led to any downgrades. All the analysts covering Ramaco and USA Rare Earth rate shares Buy. For MP, 63% rate shares Buy. The most recent downgrade for MP stock came in July. There have been a few initiatives of coverage at Hold since then.

It won’t be easy for investors to trade these stocks for the foreseeable future. News about Chinese trade negotiations will surely whipsaw shares.

What is more certain is that the U.S. will produce more rare earth materials in the future, a big positive for all three, leaving investors to figure out what they are worth.

Write to Elsa Ohlen at elsa.ohlen@barrons.com