Over the course of the year so far, shares of MP Materials (MP) have experienced a substantial increase exceeding 275%, primarily due to heightened investor enthusiasm surrounding rare earth metals and magnets.
Could the stock sustain its outstanding growth for the rest of the year and even into future periods? Here, we look at how two analysts from Fool.com address this issue.
It might be time to take some profits with this high-flying stock
Lee Samaha points out that shares for MP Materials have significantly risen in 2025, surpassing an impressive 270% increase year-to-date. This substantial growth is attributed to a shift in the company’s projected expansion following the Trump administration’s commitment to securing a domestic supply of rare earth materials and magnets.
This development has led to a 10-year contract with the Department of Defense (DOD), which is elaborated upon here. Moreover, the company has also sealed a deal with Apple, an event that investors should eagerly anticipate.
Despite these recent developments, it’s still worth pondering: Given that these occurrences seem to have been accounted for in the market, what might transpire next? The optimists propose that further opportunities could arise following the DOD’s pledge, which has reduced the risk associated with MP Materials’ proposed investment in their 10X Facility and expansion of its rare earth capabilities. They may very well be on point.
On the other hand, MP Materials is now faced with the task of building facilities, which brings potential execution risk and requires approximately $1 billion in funding from both JPMorgan and Goldman Sachs prior to the commencement of the 10X Facility in 2028.
Given the circumstances, it might be wise to lock in some profits at this point. The positive news might have already been factored into the stock price, so there’s a risk during execution and potential dilution (with the DOD owning up to 15% of the company as part of the deal). Also, there’s no certainty that new sources of rare earth materials won’t emerge in the market beforehand.
These blockbuster deals may be harbingers of what’s to come
As an enthusiastic investor, I always find gems of knowledge in various financial resources, but there’s no need to dig through Warren Buffett’s annual letters if you don’t want to. A piece of advice that pops up frequently among investors is the impossibility of predicting market trends, a lesson that rings particularly true for MP Materials at this moment.
Given the stock’s recent steep increase, it seems plausible that the share prices may stabilize or even drop at some stage. However, the precise moment for this occurrence remains uncertain. For current shareholders, a wise move would be to hold tight – perhaps increase your investment if there’s a drop. New investors should bear in mind that the stock might continue climbing before experiencing a temporary fall and then rising again, placing them at higher purchase prices than the current trading value.
The partnership between MP Materials and Apple holds significant importance, as it underscores the urgent demand for rare earth elements. These elements play a crucial role in the production of various products, ranging from everyday consumer electronics to advanced healthcare technology, all the way to aerospace and defense applications.
Companies producing such items will also strive to secure their supplies of scarce earth elements and the magnets derived from them. As the sole comprehensive rare earth materials manufacturer in the United States, and soon to be one of the few domestic producers of rare earth magnets, MP Materials enjoys a substantial competitive edge over the small number of American companies involved in producing rare earth elements.
Is now a good time to buy MP Materials?
It’s possible to find convincing reasons for and against purchasing MP Materials stocks currently. If you’ve profited from its recent surge, it might be prudent to reduce your holdings and invest elsewhere. However, the stock could still have significant growth potential in the future, so trying to predict when it will dip may not be wise. It’s important for investors to assess their risk tolerance and determine whether they can handle any future market fluctuations before deciding to buy now.
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2025-07-20 08:44