Why MP Materials Stock Crashed on Monday

Reversing course after a terrific week preholiday, shares of rare-earth minerals miner MP Materials (NYSE: MP) gave back most of last week's gains on Monday, sinking 12.2% through 11:40 a.m. ET and returning its share price to where it sat roughly 10 days ago.

The reason probably has a lot to do with President Donald Trump's tariff battle with China.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

MP Materials and the tariffs

President Trump has raised tariffs on Chinese imports to about 145% over the last few weeks. China has retaliated with 125% tariffs on imports from the U.S.

In light of this retaliation, MP Materials announced Thursday that it is halting shipments of rare-earth concentrates to China for processing, noting that "selling our valuable critical materials under 125% tariffs is neither commercially rational nor aligned with America's national interest." That makes sense, but it does come with a downside.

According to the company's most recent annual report, one single customer in China, rare earths refiner Shenghe Resources Holding, accounted for about 80% of consolidated revenue for the year ended Dec. 31.

Translation: 80% of MP Materials' export business just got vaporized by Trump's tariffs policy.

Is MP Materials stock a sell?

Not all the news is bad. MP says that it has been preparing for this moment since the start by building factories capable of refining its own concentrate and manufacturing its own rare-earth batteries. The plan will therefore be to produce and stockpile concentrate while accelerating downstream operations.

In the near term, however, it's likely MP will suffer a steep drop in revenue and perhaps even larger losses than were previously expected. Long term, Wall Street still expects to see MP Materials turn profitable, but no sooner than 2026.

It's going to be a long 12 months for investors as we wait to see how that works out.

Should you invest $1,000 in MP Materials right now?

Before you buy stock in MP Materials, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MP Materials wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $524,747!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $622,041!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

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