MP Materials (NYSE: MP), the rare-earth mining company, has seen its stock price plummet over 60% from its highs in 2025. The company, which operates the Mountain Pass mine in California, is a key player in the U.S. effort to reduce dependence on China for critical minerals. Despite this, the stock has dropped from around $100 per share last October to approximately $40 today.
The company benefits from a 10-year price floor for neodymium-praseodymium (NdPr) established by the Pentagon, which ensures a minimum price of $110 per kilogram until 2035. This price floor has provided significant financial support, contributing $17.6 million to MP's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last quarter. However, this reliance on government support raises questions about the company's long-term profitability without such assistance.
Analysts have set an average price target of $71 for MP Materials, indicating potential upside. Yet, the company's heavy dependence on government support and the looming expiration of the price floor in 2035 are reasons for caution. Investors are advised to wait for evidence that MP can generate substantial profits independently before considering a purchase.
The Motley Fool Stock Advisor team did not include MP Materials in their list of top 10 stocks to buy now, highlighting other opportunities with significant growth potential. The team's past recommendations, such as Netflix and Nvidia, have yielded substantial returns, underscoring the importance of careful stock selection.