The Curious Case of USA Rare Earth: A High-flying Farce or a Shrewd Investment?

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USA Rare Earth, a fledgling entity among a handful of bold start-ups attempting to resuscitate the art of rare earth oxide mining and the intricate craft of rare earth magnet manufacturing within the American sphere, soared with magnificent promise early on-a veritable phoenix in the trading world. In an energetic burst of optimism, the stock leapt nearly 10% in the early hours of Monday’s trading, only to fall back to earth with a grace that would shame the most clumsy of dancers, losing all of its earlier triumphs by midday.

By 1:25 p.m. ET, USA Rare Earth stock was as flat as a pancake, languishing a mere fraction under 0.1%-as fickle as the wind that blows in the sails of a ship whose captain might just have lost his map.

The Grand Purchase of Less Common Metals

In a move that would make even the most adventurous of financiers squint in intrigue, USA Rare Earth announced its grand acquisition of British Less Common Metals, or LCM, in a bid to brand itself as “the preeminent scaled rare earth metal and alloy manufacturer outside of China.” Such ambitions! To be the unrivaled leader in samarium, samarium cobalt, and the ever-so-exotic neodymium praseodymium metals and alloys-though, one must admit, these are not the metals one typically hears discussed in polite society.

S&P Global Market Intelligence, with the sort of detached precision one might expect from a well-versed critic of a theater performance, describes LCM as “a world-leading company that specializes in the manufacture and supply of complex alloy systems and metals, with a particular focus on rare earth metals.” A glowing review, indeed-though one might not be moved by the fact that LCM, despite its global repute, only achieves a modest annual revenue of $17.4 million. A veritable trifle in the grand theater of finance when compared to the fact that USA Rare Earth, in a dramatic show of its own, reports zero revenue of any sort. Ah, but fear not! The show must go on.

To fund this extravagant purchase, USA Rare Earth has decided to part with $100 million-a sum that will secure the entire common stock of LCM. A princely sum indeed, but let us not be swept away by the grandiose nature of this exchange, for in the end, it is but a calculated wager, dressed up as an opportunity.

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Is This Stock a Buy or a Fool’s Folly?

Now, one must ask, with all the pomp and circumstance surrounding this acquisition, is USA Rare Earth a worthy investment, or a theatrical folly destined for an ignoble end? The company, for all its ambitions, is burdened by no debt and boasts a rather princely sum of $120 million in cash, a treasure chest that will soon be emptied in the pursuit of this acquisition. The plan is to raise another $125 million through an existing investor-an injection of capital that may very well allow USA Rare Earth to remain afloat in its quest to conquer rare earths. However, the question remains: for how long?

After the dust settles, the stock will trade at a staggering valuation-nearly 100 times trailing sales, all of which will come courtesy of LCM’s operations. A lofty price indeed. But let us not be seduced by such inflated numbers. Next year, when USA Rare Earth begins to sell rare earths, the valuation will “drop” (if one can call it that) to around 27 times sales-still an extravagant figure in the world of practical investments. With no profits forecast until 2028, one must ask: Is this an investment, or merely an elaborate performance where the audience is yet to understand the ending?

In this case, dear reader, I am inclined to wager that USA Rare Earth is best avoided. It is the financial equivalent of a play in which the audience has not yet caught on to the farce unfolding before their eyes. The story is yet to unfold, but alas, this may not be one where we find our fortunes made. Until a clearer resolution appears on the horizon, I declare this stock a “sell.” 🎭

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2025-09-29 21:56