Major Investors Are Buying Up Shares of MP Materials. Here's Why the Industrial Stock Could Soar in 2026 and Beyond.

MP Materials (NYSE: MP) can't catch a break.

Three weeks ago, the rare-earth metals miner announced a huge earnings beat, reporting profits of $0.09 per share, well above Wall Street's $0.02 estimate. The company followed up this news with an announcement that it's ready to build its 10X rare-earth magnet production plant in Texas, with plans to begin churning out up to 10,000 tons of magnets annually by 2028.

The stock initially jumped on the news. But one month later, MP stock is down about 1% from before earnings.

Image source: Getty Images.

Wall Street jumps in with both feet

Wall Street seems fine with that, though. Institutional investors are happy to buy MP stock, even if no one else is. As MarketBeat reported Monday, major investors including Kadensa Capital, Sound Income Strategies LLC, and Bessemer Group have all been loading up on MP stock. Kadensa, in particular, just opened a new position, spending $16.5 million to acquire 245,279 shares of MP stock, as reported in its 13F filing with the SEC for Q3 2025.

At 52.6% in total, hedge funds and other institutional investors hold a majority of MP's outstanding stock.

What's the attraction? Let's take a quick look at MP Materials' 2025 earnings report, released last month.

MP Materials 2025 earnings

MP's performance in 2025 can best be described as mixed. On the one hand, the company hit a new record for rare-earth oxide production, 50,692 metric tons, up 12% year over year. Revenue for the year grew more slowly as prices eased, rising 10% to $224.4 million.

On the other hand, free cash flow ran deeply negative in 2025 -- $328.1 million -- and net losses increased 31% to $85.9 million. On the third hand, losses per share improved to $0.50 (from $0.57 in 2024) as the company expanded its share count, diluting losses among more shares outstanding.

MP ended the year with 199.2 million shares outstanding, up 22% year over year.

Better days ahead

So it's a mixed bag at best. And yet, institutional investors are still buying. Part of the reason for this may lie beyond the 2025 numbers and in what the future may hold for MP. As I pointed out last week, this has everything to do with the company's new 10X factory.

As mentioned, 10X is being designed to produce 10,000 metric tons of magnets annually and will open for business in 2028. Consider that 10,000 tons is roughly the amount of rare-earth magnets that the U.S. imported as bare magnets in 2024. However, the market for these magnets is expected to grow at 17% annually. Moreover, the U.S. already imports an additional 30,000 tons of magnets incorporated into other products as parts pre-import.

That makes total U.S. magnet demand closer to 40,000 tons today. By 2030, demand could hit 50,000 tons.

Long story short, when 10X opens for business in 2028, MP will be selling into a market with more demand for its products than it can satisfy on its own. This imbalance between supply and demand implies both higher profits for MP and plenty of room for further production (and sales) growth.

Suffice it to say, this bodes well for the stock.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.