MP Materials: Evaluating the Rare Earth Magnets Play After a 230% Rally

Understanding the Business Model

Rare earth magnets power modern technology in ways most investors don’t realize. Every smartphone vibrates, every laptop charges, and every speaker functions because of specialized magnets containing elements like neodymium, iron, and boron. For decades, U.S. industries have depended on foreign sources for these critical materials. MP Materials (NYSE: MP), however, has positioned itself as a domestic alternative.

The company operates the Mountain Pass mine in California—one of the few scalable rare earth extraction facilities within U.S. borders. Beyond mining, MP has begun building vertical integration through manufacturing operations, including a magnet production facility in Fort Worth, Texas, and the emerging 10X Facility designed for larger-scale magnet output.

Strategic Partnerships Signal Long-Term Demand

Two landmark deals announced in 2025 have reshaped investor sentiment around MP Materials:

Department of Defense Investment: The DOD allocated $400 million to MP, with terms that included a 10-year price floor of $110 per kilogram for NdPr (neodymium-praseodymium). Additionally, the government guaranteed it would purchase 100% of magnet production from the 10X Facility for the next decade. This security provides unprecedented revenue visibility.

Apple Supply Agreement: MP secured a multiyear contract valued at $500 million with Apple (NASDAQ: AAPL) to supply 100% recycled rare earth magnets. Apple prepaid $200 million upfront, further strengthening MP’s balance sheet.

These partnerships underscore both the strategic importance of domestic rare earth production and investor confidence in MP’s execution capability.

Stock Performance and Valuation Reality Check

The market has responded enthusiastically. Over the past 12 months, MP Materials stock has climbed more than 230%—significantly outpacing the broader market and many mega-cap technology companies. An investor who deployed $1,000 a year ago would hold a position valued near $3,500 today.

However, the sharp appreciation has also compressed valuation multiples. Current trading levels reflect considerable optimism about the company’s ability to scale manufacturing, secure additional contracts, and achieve profitability amid expansion.

Key Risks to Consider

While the demand fundamentals appear solid, execution challenges remain:

• Manufacturing Scale-Up: Building out the magnet production capacity at the 10X Facility and other facilities will require substantial capital and operational expertise. During this expansion phase, margins may compress before improving.

• High Valuation Multiples: After a 230% gain, the stock no longer offers the same margin of safety. Entry at current levels carries elevated risk.

• Market Competition: As rare earth production becomes strategically important, competitors may emerge or geopolitical factors could shift.

The Verdict

MP Materials has transformed from a niche miner into a company with concrete government and corporate partnerships, creating legitimate long-term tailwinds. The business fundamentals support the strategic importance of its assets.

That said, a $1,000 investment at current valuations is better suited for investors with higher risk tolerance and longer time horizons. Those seeking lower-volatility positions may prefer to wait for a more attractive entry point or diversify their exposure through other means.