What to Know Before Buying MP Materials Stock

MP Materials (NYSE: MP) is an exciting company that's operating at the forefront of the battle to secure a domestic supply of critical rare-earth materials. It has signed several high-profile deals in 2025 that helped elevate the stock price and delight investors. But investment is more about what a company will do in the future, rather than how it has done in the past.

Here's what you need to know about buying MP Materials stock now.

High-profile deals

The company owns and operates the Mountain Pass rare-earth mine in eastern California, as well as a facility in Texas that manufactures rare-earth alloys and magnets. In addition, it will build a second magnet manufacturing facility, known as "10X Facility" in concordance with a transformational deal signed with the U.S. Department of Defense (DoD) earlier in the year.

The DoD deal is just one of the major deals signed this year. The second was a $500 million partnership with Apple, which will result in a significant expansion of the Texas facility to supply Apple with rare-earth magnets starting in 2027.

Image source: Getty Images.

The third deal was signed recently, whereby MP Materials and the DoD will be partners in holding a 49% stake in a joint venture with the Saudi Arabian Mining Company to build a rare-earth refinery in Saudi Arabia.

However, the first deal with the DoD is by far the most significant, whereby the DoD has made a $400 million investment in MP Materials, becoming its largest shareholder and set to own 15% of the company. In addition, the DoD will ensure that magnets to be produced at 10X will be purchased for a decade. In addition, the DoD "entered into a 10-year agreement establishing a price floor commitment of $110 per kilogram for MP Materials' NdPr products stockpiled or sold," according to the press release.

These agreements underpin MP Materials' future cash flows and expansion plans, and the market was not slow to reward the stock accordingly.

Risk factors

That said, it's important to note that public-private partnerships are always subject to political risk. A new administration could sell the equity stake, and although the commercial arrangement would be difficult to adjust fundamentally, MP Materials remains subject to regulatory approvals and is likely to require additional funding if it continues its expansionary plans.

In addition, while the 10-year agreements with the DoD provide stability, it's incredibly difficult to predict the price of rare-earth magnets over a decade. It's also extremely challenging to predict whether non-Chinese sources of rare-earth materials and magnets will be accessible over the next decade. Moreover, there's always an execution risk associated with its facility expansions and the construction of the 10X facility.

Buying MP Materials stock

The stock is undoubtedly exciting, and the company clearly holds key strategic importance, but it's not without risk, and investors need to be prepared for a volatile ride if they decide to buy this stock.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.