Shares of MP Materials (NYSE: MP), a miner of rare earth metals, shot up 11% through 10:15 a.m. ET Tuesday morning after China announced restrictions on exports to the U.S. of certain products containing gallium, germanium, antimony, and “superhard materials,” based on a Reuters report.
China is responding to analogous U.S. restrictions on exports to China of semiconductor chips and chipmaking technology. These latest restrictions construct on prior restrictions, announced in December 2023, on technology useful in manufacturing rare earth magnets.
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MP Materials is arguably America’s leading producer of rare earth ore, which might be refined into rare earth metals, which may then be used to fabricate rare earth magnets (utilized in the whole lot from electric automotive motors to wind turbines to high-tech defense products comparable to military drones). The corporate produces primarily neodymium-praseodymium (Nd-Pr) ore and metal, nevertheless, which don’t seem like the first goal of China’s just-announced export restrictions — so there isn’t any immediate relationship between the export ban and today’s spike in MP’s share price.
That said, the sooner 2023 restrictions remain in place, and can proceed to favor firms like MP Materials, which ensure domestic access to strategic rare earth metals. Investors are probably taking a cue from these latest restrictions, interpreting them as warning shots in a trade war that will grow in size and scope under a Trump administration that has promised to impose latest tariffs on Chinese exports.
Treating MP Materials stock as a type of “trade war play” is sensible — but that does not necessarily make MP stock a buy. Unprofitable and with more debt than money on its balance sheet, MP is making progress scaling its operations and shifting its products higher on the worth chain. Analysts, nevertheless, see MP as still greater than a yr away from turning a profit on its rare earths business.
Valued on 2026 estimated earnings ($0.77), the stock costs 30 times forward earnings today. At best I’d call that a speculative buy.
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