Everyone’s been chasing AI and chips, but behind that tech, specifically the magnets that make EVs, drones, wind turbines, and defense hardware actually move, just produced a sleeper winner.
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Strategic Positioning
MP Materials (NYSE: MP) owns Mountain Pass in California, the only scaled rare-earth mining and processing site in North America.
The company is now moving downstream into separation, metal, alloys, and permanent magnets.
That matters because the value, and the margins, live further down the chain.
Two partnerships supercharged the story this summer:
U.S. Department of Defense package: preferred equity (~$400M), a $150M loan for heavy rare-earth separation, a decade-long NdPr price floor around $110/kg, and a 10-year offtake that can absorb up to 100% of output from MP’s planned “10X” magnet facility, with a minimum annual EBITDA backstop
(inflation-adjusted). The DoD also holds a warrant that could take it near 15% ownership.
That means policy support plus revenue visibility that most miners would kill for.Apple deal: long-term agreement to supply U.S.-made, recycled rare-earth magnets from the Texas “Independence” facility, with $200M of prepayments tied to milestones.
That’s validation from a premium buyer and helps fund the ramp without pure equity dilution.
Geopolitics are the wind at MP’s back. China dominates rare-earth magnet supply and export controls and slower approvals create urgency for a domestic alternative.
MP is essentially being asked to become the national champion, from ore to magnet.
Action
Starter buy: scale in around $66–$71 if you want exposure to the secure supply chain theme without chasing blow-off moves.
Add on strength: above $75–$76 on clean volume if the magnet ramp and pricing updates stay constructive.
Initial targets: $82 (recent high vicinity) and $90 if execution keeps surprising positively.
Risk control: mental stop in the low-$60s, if sentiment turns or the ramp slips a quarter, these pullbacks can be fast.
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Recent Momentum
The stock is up ~335% YTD and ~341% over the past year, so yes, there’s a lot of good news in the tape. Operations are moving:
Q2 snapshot: revenue $57.4M (+84% YoY); NdPr output up ~119% YoY; still an adjusted loss of $0.13 as they invest to scale separation and magnets.
Shift in sales mix: management stopped sending concentrate to China (tariffs/export frictions) and is prioritizing separated products and non-China customers (think Japan, South Korea).
Street posture: CFRA bumped PT to $88 (still only a Buy, not a Strong Buy) on a higher out-year EBITDA build; other shops (TD Cowen, etc.) have leaned constructive post-Q2.
The tone is optimistic but not euphoric—a decent backdrop if execution keeps landing.
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Why You Should Look At These Levels
This isn’t (yet) about printing fat near-term earnings. It’s about de-risking a domestic magnet supply chain and getting paid for it later.
Scarcity value: Mountain Pass is the only scaled game in town. If you want U.S.-origin NdPr feedstock for magnets, this is where you start.
Downstream integration: metal → alloys → magnets is where margin expansion lives. If the 10X facility hits stride, MP’s revenue mix should tilt to higher-value products.
Policy ballast: that 10-year price floor and offtake commitment give revenue, and lender comfort, real scaffolding through cycles.
Blue-chip demand: Apple’s prepayments help fund the build while signaling quality and reliability to other OEMs.
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Valuation Check
Here’s the grown-up conversation. The stock trades like a hyper-growth industrial, not a traditional miner.
Depending on which number you use, forward revenue multiples are nosebleed for a materials name, and 2025 is still modeled as a loss with a turn to profits in 2026–2027 (Street numbers vary; think ~$0.80 in 2026 and ~$1.28 in 2027 as a rough sketch).
That’s why pullbacks matter, as you’re paying up for a long runway and execution.
My take is that the story can outrun valuation if magnet volumes ramp, the DoD floor underwrites pricing, and additional anchor customers show up.
But this is not a set it and forget it cheap compounder. You’re underwriting build-out risk for a shot at strategic scarcity economics.
Catalysts to Watch
Magnet ramp milestones: Independence (Texas) output, yields, and customer acceptance tests; tangible progress on the 10X facility timeline.
Contract wins: another tier-1 OEM or defense award would broaden buyer concentration and reduce perceived single-customer risk.
Pricing and spreads: NdPr spot vs. the DoD floor; how realized pricing tracks as volumes rise.
Separation throughput: Mountain Pass heavy REE progress; higher recoveries = better unit economics.
Balance-sheet moves: using Apple prepayments/DoD capital to limit dilution; any additional capital raises and their terms.
Policy headlines: U.S.–China trade posture, export regimes, and domestic incentives for magnets and critical minerals.
Risks
Let’s talk about the potholes, because there are a few:
Execution risk: scaling separation and magnets (multiple plants) is hard. Slips in yields, capex creep, or customer acceptance push out the hockey stick.
Valuation air pocket: after a 4x year, any miss can rerate the stock quickly. High-beta materials + momentum unwind = volatile drawdowns.
Commodity/pricing: the DoD floor helps, but broader NdPr pricing still matters for margins and investor mood.
Policy risk: government support is a feature, but it’s also political; programs, floors, and procurement priorities can change across cycles.
Customer concentration: Apple is great; more blue-chip names would be better.
Global supply response: if Chinese exports normalize or alternative supply ramps faster than expected, the scarcity premium could compress.
How I’d Build It (Practical Game Plan)
Starter: 25–33% of intended size around $66–$71.
Confirmation add: another 25–33% > $75–$76 with strong volume and positive plant updates.
On weakness: last tranche near $62–$64 if the story is intact and the selloff is macro or momentum-driven.
Risk guardrails: reassess if magnet milestones slip by a full quarter or if unit costs aren’t trending down as utilization climbs.
Time horizon: treat it as a 2–4 year build-out, not a quarter-to-quarter trade.
Final Take
This is a national-interest, scarce-asset story with real assets, real partners, and a credible plan to climb the value chain, but you’re paying a premium and living with execution risk while the magnet business scales.
If you want exposure to the secure U.S. supply chain for critical tech theme, this is the cleanest public vehicle.
Size it with respect for volatility, buy pullbacks, add on proof, and let the policy and OEM tailwinds do some heavy lifting.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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