MP Materials Stock Is Having a Great Year so Far. Can the Run Continue?

Key Points

• MP Materials is the only rare earth magnet producer with an active U.S. mining operation.

• China stopped shipping rare earth metals to the U.S. in April.

• The U.S. Department of Defense has partnered with MP Materials in an attempt to limit dependency on foreign production.

• 10 stocks we like better than MP Materials ›

It's been an outstanding year to own MP Materials (NYSE: MP) stock. From the end of 2024 through Oct. 3, 2025, Shares of the rare earth metals and magnets producer rose 358%.

The U.S. Government's push to reshore manufacturing is the tailwind pushing this stock forward. Magnets made from rare earth elements, especially neodymium, are essential components in electronic vehicles, military drones, and everyday consumer electronics.

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The first thing to know about rare earth magnets is that China is the world's leading supplier of refined rare earth metals. This April, China halted exports of rare earth metals to the U.S. to strengthen its position when negotiating new tariffs. That decision has plenty of American businesses eager to build a more secure supply chain.

Image source: Getty Images.

In the right place at the right time

As the only operational rare earth mine operator in the U.S., MP Materials is an obvious beneficiary of a reshoring push. Recently, USA Rare Earth has collected a great deal of capital with the intention of creating an end-to-end magnet production chain. The potential competitor acquired some mining rights in Texas, but it hasn't begun extracting any minerals yet.

As the only magnet manufacturer with an operational mine, MP Materials is in a good position to receive government assistance. In July, the company entered a partnership with the U.S. Department of Defense (DoD) to build up the country's rare earth magnet supply chain.

MP Materials intends to use government funds to construct a second domestic magnet manufacturing facility to be called the 10x Facility. Once complete, DoD has agreed to ensure the sale of every magnet the new facility produces for 10 years. The company thinks it can produce 10,000 kilograms annually with help from the new facility, once it's built.

Also in July, MP Materials announced an agreement to sell magnets to Apple for use in its popular devices. Magnet shipments to the iPhone manufacturer are expected to begin in 2027.

Missing the most important part of the supply chain

Before getting too excited about MP Materials, it's important to understand that its facilities for refining ore into metal that can be used to manufacture magnets are small. This is why the deal with Apple involves recycling old magnets, not producing new ones from ore the company dug up in its Californian mining operation.

The 10x Facility to be built in partnership with DoD is for manufacturing magnets. It isn't the big refinery that the company needs to actually remove China from its supply chain. The company only expects to improve the minor refining operation at its Mountain Pass, California facility.

It's unlikely that MP Materials' planned improvements will allow for much independence from Chinese imports. Rare earth metal refining is a chemically intensive process that produces heaps of health-threatening pollution. It's hard to imagine environmental regulators in California letting such a refinery operate at scale.

Why MP Materials' stock is risky

Investors who buy MP Materials at recent prices need the company to overcome some extremely high expectations, or they could suffer heavy losses. Most basic materials companies trade at price-to-sales multiples in the low single digits. With a market cap north of $12.6 billion, this stock is trading at 48 times trailing 12-month sales.

The DoD established a guaranteed minimum price of $110 per kilogram of neodymium and praseodymium (NdPr) to be processed at the 10x Facility. The company hasn't broken ground yet. Even if we can assume it will rapidly complete construction and begin selling 10,000 kg annually to DoD at that price, we can only expect about $1.1 billion annually.

A bet on MP Materials now is a bet that its new battery recycling program with Apple succeeds. New investors are also betting on perfect execution regarding its partnership with DoD. Those bets entail more risk than most investors should feel comfortable with. It's probably best to keep this company on a watchlist for now and revisit it after its 10x Facility is up and running.

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Cory Renauer 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.