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MP Materials: Making Progress

May 24, 2023 9:33 AM ETMP Materials Corp. (MP)6 Comments
UFD Capital profile picture
UFD Capital


  • Shares in MP Materials have sold off sharply and are now down for the year.
  • The company is continuing to execute its plans to re-shore the rare earth supply chain in North America and vertically integrate.
  • Pricing concerns are short-term in nature, and MP Materials is well-positioned to benefit from the green energy transition over the coming decades.
  • The company is trading near its lowest PE multiple since the SPAC merger.
  • We believe the recent selloff is overdone, and the risk/reward is favorable at these levels.

Aerial view of Open-pit iron mine

temizyurek/E+ via Getty Images


The stock of MP Materials (NYSE:MP) has sold off dramatically and is now down for the year. The company is making progress on their long-term vertical integration plans and pricing concerns are short-term in nature. We

This article was written by

UFD Capital profile picture
UFD Capital is the general partner and investment manager of the UFD Capital Value Fund, a value-oriented hedge fund. www.ufdcapital.com

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in MP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

gbfraser profile picture
Regrettably, I have to say that your article is substantially incomplete. It misses even mentioning two issues, either of which might turn out to be crucial to the ultimate commercial success of MP and its stock. First, you don't discuss the composition of the basket of rare earths that MP produces. Without going into too much detail, MP's basket is much more composed of the "light" REs than the "heavy" REs. It's the "heavies" where the real scarcity and value lie. In its post-bankruptcy incarnation, MP has been able to derive more revenue from the heavies than pre-bankruptcy; however, it's still probably fair to say that its basket is predominantly light. Secondly, you don't mention at all the special relationship that it has with the Chinese related company which buys most or all of its output. This relationship could become crucial for any number of reasons, and there have been some allegations over time that the transfer pricing mechanism was not reasonable which creates potential taxation and transparency risks. While I have no current view on the current investment merit of MP, for those who want to speculate on the creation of a North American rare earth supply chain, the recent news from METC about its heavy-rich RE deposit seems like an interesting speculation. Of course, it's very early days and the information is limited, so caveat emptor!
gcbrock44 profile picture
@gbfraser Maybe the "heavies" are more scarce but it's the NdPr (light RE) that is needed to make the magnets for EVs. And EVs are the future that we're all betting on as MP investors. One additional fact that most seem to miss is that MPs ore content is much higher than most RE deposits found around the world, so their inherent mining costs will be lower as well. And as with any commodity the low cost producer wins in the end. Especially, ones that are vertically integrated.
gbfraser profile picture
@gcbrock44 I'm not sure why you think MP's ore is rich. The graphic on this press release, and others that I have seen, would argue otherwise.

bobsar profile picture
Isn't iron going to replace RE for batteries. That might be a bit of a change.
Jack Harkness profile picture
@bobsar iron replaces nickel and cobolt in batteries. RE is used in motors. Tesla has a new motor that doesn't use rare earth's, but that doesn't mean the demand won't still increase.
Burt Rothberg profile picture
@Jack Harkness Tesla is going to use a non-RE motor in their new sub-25K version. It will have efficiency and range tradeoffs, but they are working to a price.
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