Shares of uncommon earth supplies and magnets firm MP Supplies (MP 7.80%) rose by 113.3% within the first half of 2025, in keeping with knowledge from S&P International Market Intelligence. That is thrilling sufficient, however it does not inform something like the entire story of a inventory that is entrance and middle in a number of the most hotly debated political points — particularly, the strategic necessity for the U.S. to cut back dependence on China for uncommon earth supplies important for the fashionable economic system, together with protection tools.
MP Supplies inventory in 2025
Certainly, whereas the inventory is up 113% by the tip of June, it has elevated by 211% 12 months to this point as of the time of my writing, and this development hasn’t been linear.
The long-term bull case for the inventory rests on the concept U.S. administrations will intention for uncommon earth materials independence from China, and MP Supplies, an organization that operates the one uncommon earth and processing facility, at Mountain Move in California, , might be a key a part of the method.
On the flip facet, the commerce battle with China is a near-term unfavorable for the corporate’s earnngs, on condition that the corporate presently sells the “overwhelming majority” of its uncommon earth focus to a Chinese language firm, in keeping with its SEC filings.
As such, the inventory has bounced round this 12 months, typically hovering on hypothesis that the U.S. would aggressively pursue uncommon earth independence, and typically crashing on the idea that the buying and selling relationship with China had improved all year long and the nation would certainly resume delivering uncommon earth supplies to america.
Nevertheless, as beforehand famous, there isn’t any purpose the Trump administration could not determine to pursue a parallel observe of encouraging home uncommon earth supplies provide whereas persevering with to purchase from China.
Picture supply: Getty Photos.
What occurred to MP Supplies’ inventory
The excellent news is that the administration did determine to pursue a parallel observe, with the Division of Protection (DoD) not too long ago signing a deal for the next:
- There’s a assured worth flooring of $110 per kilogram for uncommon earth merchandise.
- Following the development of a second magnet manufacturing facility, the “10X Facility,” the DoD will make sure that protection and business prospects will buy all magnets produced by 10X.
- The DoD will purchase $400 million in convertible inventory, positioning itself to personal 15% of the corporate.
- MP Supplies will obtain a $150 million mortgage from the DoD to broaden capability at Mountain Move and has obtained commitments from JPMorgan and Goldman Sachs to offer $1 billion in financing for 10X.
The newest replace is nice information for MP Supplies. Nonetheless, it is from sure how this can play out over the long run, and the important thing choices are being made by a comparatively small variety of people who find themselves closely influenced by political concerns. As such, it is laborious to argue that retail traders have any edge in long-term investing on this inventory.
JPMorgan Chase is an promoting companion of Motley Idiot Cash. Lee Samaha has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Idiot recommends MP Supplies. The Motley Idiot has a disclosure coverage.
