Why Shares in Rare Earth Company MP Materials Surged Again This Week

Very few companies demonstrate the complexity of the current trade conflict and the strategic necessity of securing rare earth materials for the U.S. more effectively than MP Materials (NYSE: MP), and its share price action this week, up 21.8% at the time of writing, underscores this point.

A complicated trading position

Management describes the company as being "America's rare earth magnetics champion," as it is "America's only fully integrated rare earth producer." However, as fellow Fool.com writer Rich Smith notes, Shenghe Resources (a majority-owned subsidiary of China's Shenghe Resources Holding Company) was a major customer of MP Materials, and the company that MP Materials "sells the vast majority of its rare earth concentrate" to, according to its SEC filings.

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 »

Moreover, in mid-April, MP Materials said it had "ceased shipments of rare earth concentrate to China" due to China's tariffs and the issue of selling critical materials not being "aligned with America's national interest." As such, the trade conflict is a near-term negative for MP Materials.

The long-term picture

That said, and as management consistently argues, the company's real growth opportunity lies in being part of the U.S. developing its own rare earth supply chain. It's a point reiterated by CEO James Litinsky on a recent earnings call: "What is now abundantly clear is that the United States must urgently accelerate its full-scale domestic rare earth magnetic supply chain."

Image source: Getty Images.

As such, when speculation rises that the administration is working to secure funding for the company, the stock is likely to perform well, as it did this week.

It's an interesting situation, but with so much uncertainty surrounding the company's direction, it's challenging to argue that retail investors have any kind of advantage in investing in the stock.

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 $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% 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 June 9, 2025

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