USA Rare Earth: A Mostly Harmless Investment?

USA Rare Earth (USAR +6.02%) has, shall we say, engaged with the stock market. It’s a bit like introducing two black holes to each other – a lot of energy, a lot of swirling, and a distinct possibility of everything disappearing. The company materialized into public existence via a merger with a Special Purpose Acquisition Company (SPAC) in March 2025 – a financial construct that, when you think about it, is essentially paying someone to find a company to exist. Remarkable. Since then, the share price has experienced a roughly 141% ascent from its initial trading point, which, in the grand scheme of things, is either a triumph or a temporary defiance of the laws of probability. We’ll leave that to the physicists.

However, and there’s always a ‘however’, it’s also down about 33% from its peak last October. This is not entirely unexpected; markets, like cats, are notoriously fickle. Recent rallies have been… spirited, but whether that spirit will endure is a question best pondered while simultaneously juggling chainsaws and reciting poetry. (Don’t actually do that.) The core question remains: is USA Rare Earth poised to outpace the market over the next five years, or is it a particularly shiny object destined to be lost in the cosmic dustbin of speculative investments?

USA Rare Earth: A Binary Outcome (Probably)

As of this writing, USA Rare Earth boasts a market capitalization of approximately $3.5 billion. Which is… a lot of billions. The slightly awkward detail? It hasn’t actually recorded any revenue yet. It’s a bit like having a spaceship that’s beautifully designed but hasn’t quite gotten around to the flying part. Still, it’s positioned to potentially benefit from the surging demand for mineral processing and magnet production, although charting its performance outlook is akin to predicting the winning lottery numbers using only a tea leaf and a vague sense of optimism.

Early 2026 saw a surge in the share price following the announcement of contracts to launch new mineral refining operations in France. Its Less Common Metals Europe SAS subsidiary is constructing a plant capable of producing 3,750 metric tons of refined material annually. The French government is contributing a credit covering up to 45% of equipment costs and reimbursing up to 130 million euros in real estate expenses. (One wonders if they’ve factored in the cost of replacing the inevitable rogue robot uprising. It’s always the robots.)

The stock has also received a boost from news of the Trump administration’s efforts to bolster the United States’ rare-earth mineral reserves and sourcing capabilities. (A development which, viewed from a purely geological perspective, is rather sensible. Though, naturally, everything is more complicated than it appears.)

In late January, USA Rare Earth announced a non-binding letter of intent suggesting that the U.S. Commerce Department and partners were considering providing $1.6 billion in funding. Furthermore, the U.S. government is taking a stake in the company. (This is a bit like the universe deciding to invest in itself. It’s bound to be interesting.)

As a pre-revenue entity, USA Rare Earth is, let’s be honest, a risky proposition. While it’s becoming increasingly clear that the U.S. and its allies will be increasing investment in rare-earth mineral sourcing to reduce reliance on Chinese providers, the company still has a considerable amount to prove. (And proving things, as any philosopher will tell you, is remarkably difficult.)

However, the risk-reward profile could still be worthwhile for investors who aren’t deterred by potential volatility. The share price may experience a pullback following recent gains, but the potential for long-term market outperformance remains intact. (Though, naturally, nothing is ever truly ‘intact’ when dealing with the infinite complexities of the stock market. It’s all just a temporary arrangement.)

2026-02-07 21:23

USA Rare Earth: A Binary Outcome (Probably)

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