Recently, rare earth elements and China have once again become the focus of news, a development that has brought positive momentum for MP Materials (MP), a company holding strategic domestic assets. Its stock price surged by up to 13% on Friday. Behind this rally lies the uncertainty that geopolitical tensions bring to the supply chains of critical materials. As core materials used in various industrial and military electronic applications, whenever rare earth elements attract international attention, they often drive up the stock prices of related companies, and MP Materials is a typical example.
MP Materials’ strategic position in the United States has become increasingly prominent, especially after July 2024. At that time, the U.S. Department of Defense directly invested $400 million in the company and committed to purchasing its future output at a certain floor price. This strong support stems from a key context: China controls about 70% of the global rare earth products. The new tensions have shattered investors’ expectations for improved relations since April, instead highlighting the value of MP Materials as a domestic U.S. rare earth miner. If rare earth imports are delayed or disrupted for any reason, market demand for MP Materials would only increase significantly.
This trend is not an isolated case. Since the beginning of this year, prices of various strategic assets in the U.S., from rare earths and uranium to semiconductors, have risen. This reflects the U.S. government’s increasingly protectionist stance and its efforts to reduce dependence on foreign materials and goods and achieve self-sufficiency, although this process also brings inflationary pressures. These macro trends are not expected to slow down soon, so including such “strategic” companies in a diversified portfolio has become a consideration for many investors.
From 2024 to early October 2025, MP Materials’ stock price achieved a remarkable 358% surge, benefiting from the “reshoring” wave pushed by the U.S. government to bring manufacturing back. Magnets made from rare earth elements (such as neodymium) are key components for electric vehicles, military drones, and consumer electronics. As the only currently operating rare earth miner in the U.S., MP Materials is undoubtedly the biggest beneficiary.
The company’s strategic layout made significant progress in July. Besides the collaboration with the Department of Defense, MP Materials also announced an agreement with Apple to supply magnets for its popular devices starting in 2027. Simultaneously, the company plans to use government funding to build a second magnet manufacturing plant named the “10x Factory.” The Department of Defense has committed to purchasing all magnets produced by this plant over the next decade. The company expects the new factory to increase its annual production to 10,000 kilograms, aiming to build an end-to-end domestic supply chain.
However, investing in MP Materials at the current price means investors must believe the company can deliver on some very high market expectations. Its market capitalization of over $12.6 billion corresponds to a trailing twelve-month price-to-earnings ratio as high as 48, which starkly contrasts with the general valuation of the basic materials industry, where price-to-sales ratios are typically in the single digits.
The risks are specifically reflected in its ambitious plans. The Department of Defense has set a minimum guaranteed price of $110 per kilogram for the neodymium-praseodymium (NdPr) products from the “10x Factory.” Even assuming the factory can be built quickly and sells 10,000 kilograms annually at that price, the resulting annual sales would only be around $1.1 billion. And currently, this factory has not yet broken ground. Therefore, betting on MP Materials now is equivalent to betting that both its collaboration with Apple and its project with the Department of Defense will succeed perfectly—risks that may be beyond the tolerance of most investors. For cautious investors, adding the company to a watchlist and making a decision only after its “10x Factory” is operational might be a more prudent choice.
