MP Materials ‘ stock price has been in a strong uptrend this year and is now trading at the highest level on record as investors focus on the ongoing demand for rare earth materials and the geopolitical risks between the United States and China.
The stock jumped to a high of $86 in the premarket, bringing its market capitalization to over $14 billion. This article explores why the MP share price may jump to $150 in the next few months.
Why MP Materials stock price is soaring
MP Materials share price has jumped by over 758% from its lowest level in 2024, making it one of the best-performing companies in the United States.
This surge has intensified during the Donald Trump administration, which has intensified geopolitical tensions with China, a country that dominates the rare earth industry.
In a statement last week, China said that it will start limiting rare earth materials exports starting from next month, as it blamed the US for the new geopolitical tensions. Such a move will benefit MP Materials, which is the biggest company in the industry in the United States.
The company will also benefit even if the United States and China reach a trade deal this year because the US will continue to boost its market share in the industry as it has observed the leverage that China has.
MP Materials will also benefit after a report by the FT noted that the Pentagon was considering buying critical materials worth over $2 billion to stockpile. It will likely be the top companies to benefit in this deal. The FT said:
“They’re definitely looking for more, and they’re doing it in a deliberate and expansive way, and looking for new sources of different ores needed for defence products.”
Besides, the Department of Defense has already taken a 15% stake in the company. The government has also committed to buy its materials worth billions of dollars in the coming years.
MP’s business is growing
The most recent results showed that MP Materials’ revenue surged by 84% YoY in the second quarter to $57 million. This surge happened as the company hit a record high NdPr production of 597 metric tons, a 119% annual increase.
Its NdPr sales more than tripled, a trend that will accelerate as the government and private sector players like automakers and other manufacturers seek to diversify their business from China, which still maintains a 90% market share in the industry.
The results showed that the materials segment made $37.5 million in revenue in the last quarter, while the magnetics segment made over $19 million.
Most importantly, the company continued to narrow its losses. Its net loss improved by $6.7 million to $21.5 million.
Analysts are optimistic that the company’s business will continue to do well in the long term as demand rises. The average revenue estimate for the year is $238 million, up by 38% from the same period last year. It will then make $705 million next year, a 149% annual increase, and then turn a profit.
Odds are that the company’s business will be much better than expected because of the ongoing demand for rare earth materials and magnets.
As such, these numbers mean that the company’s stock will keep doing well despite its premium valuation as companies like Apple place their bids.
MP Materials share price technical analysis
MP stock price chart | Source: TradingView
The daily timeframe chart shows that the MP Materials stock price has been in a strong uptrend in the past few months, moving from a low of $10 in August last year to $80 today.
Most recently, the stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA). It also formed a bullish flag pattern, which is a common bullish continuation sign in technical analysis.
Therefore, the most likely scenario is where the stock rises and hits $100 in the near term. It may also surge to over $150 in the long term as the geopolitical between the US and China remains.
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