Why Rare Earth Stock MP Materials Dropped 11.9% in October

After falling 13.6% in September, MP Materials (NYSE:MP) shares continued to tumble last month. With firms curbing their enthusiasm for the rare-earth stock, investors had sufficient cause to click the sell button.

According to data provided by S&P Global Market Intelligence, MP Materials stock fell 11.9% in October.

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Firms see less likelihood of MP Materials stock moving higher

Maintaining an outperform rating, Baird cut its price target 19% to $65 from $80 on Oct. 1. Based on MP Materials stock closing at $47.29 on Sept. 30, Baird's new price target implied upside of 37%.

A few days later, Morgan Stanley adopted a similar perspective on MP Materials stock, slashing its price target to $66 from $73. According to Thefly.com, Morgan Stanley stated in a note on Americas Metals & Mining that it currently prefers precious metal stocks, recognizing "upside to spot gold and silver prices near-term and higher long-term price forecasts."

Later in October, Goldman Sachs also adopted a less optimistic stance, lowering its price target on MP Materials to $57 from $65, while maintaining a buy rating.

MP Materials is an American company that operates throughout the rare-earth supply chain. In addition to owning and operating the Mountain Pass Rare Earth Mine and Processing Facility in California, the company owns and operates Independence, a rare-earth metal, alloy, and magnet manufacturing facility in Texas.

The company has two reportable segments. The materials segment generates revenue primarily from sales of neodymium-praseodymium oxide and metal, mostly sold to customers in the United States, Japan, and South Korea. The magnetics segment includes the Independence facility, which produces and sells magnetic precursor products and rare-earth permanent magnets.

Is MP Materials a buy on the dip?

It's not only the last week of October that was challenging for MP Materials. Shares of the rare-earth specialist are currently down about 53% from their 52-week high. While the recent plunge may be alarming, the company hasn't reported anything disastrous that underpins the drop. Instead, it's simply part of a sectorwide decline in rare-earth stocks.

For those who have been waiting patiently for MP Materials stock to dip to a more attractive entry point, now may be a great time to act. Before doing so, though, investors will want to dig into the company's third-quarter 2026 financial results (expected to be released after the market closes on Nov. 5) to confirm that it's making progress with construction of its 10X facility, a large rare-earth magnet manufacturing facility located in Texas.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and MP Materials. The Motley Fool has a disclosure policy.