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MP Materials: A Different Way To Benefit From The EV Boom

Jul. 07, 2023 3:36 AM ETMP Materials Corp. (MP)18 Comments
Wealth Analytics profile picture
Wealth Analytics


  • MP Materials, a mining and processing company for rare earth materials, aims to reduce global dependence on China for these materials, essential for advanced technologies.
  • Despite lower prices for rare earth materials, MP has remained resilient, benefiting from the trend of reshoring to North America and the increasing demand in the EV market.
  • The company faces risks such as negative cash flows and share dilution, but its strong financial position and the potential for price appreciation due to material shortage are positive indicators.

Aerial view of Open-pit iron mine


Investment Rundown

MP Materials Corp. (NYSE:MP) specializes in mining and processing critical materials required for advanced technologies, such as electric vehicles, wind turbines, and defense systems. Their focus is on rare earth materials and their extraction. Their operations are based in California and

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Wealth Analytics profile picture
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Comments (18)

That was a weird call. They did not give guidance on production, price or demand. The best guidance was on the interest earned on the balance sheet cash. I suppose it is ok as a strategic hold as they do seem to be in a unique position within a supply security context. 4 billion market cap with a 1 billion cash balance. What is the future earnings power of this company? It’s profile for modeling and pricing as a public company is difficult.
TAS profile picture
CNBC touted thus stock heavily on August 4th over a thirty second time period....by one regular panelist.

Take that for what it is worth. As for me, pass. This stock harkens the promise, and disappointment -- of EVGO in the EV charging station race. All the qualities, but getting blown out of the water by facts on the ground with major players elsewhere.
Investor since ‘73 profile picture
@TAS The other player in this space is China, MP being the ONLY player in America for neodymium, vital for EVs, wind turbines etc. China would prefer to keep a stranglehold on the market and avoid competition but can’t stop MP. The next best thing to a near monopoly? Buy it for 1/3 it’s value on the open market and the way to do that? Simply reduce the price of neodymium to lower MP’s #s, taking the stock down from 60 to 20. Sure it’s only a few billion$, but easy money for their government funded cyber ops that focuses on targeting US businesses. A few billion here, a few billion there and pretty soon it’s real money, as they say.
In addition to consolidating 6 rare earth companies to 2, it looks like China is cracking down on illegal mining. All of these should help boost the global price of rare earth.


BEIJING (Reuters) - China’s Ministry of Emergency Management said in a meeting that it would take action to prevent mining accidents being covered up and to crack down on illegal mining, state media said on Monday.
Investor since ‘73 profile picture
@SR1978 China controls the world market for neodymium and can raise or lower the price as it sees fit. Right now, it’s to their benefit to temporarily keep prices low so that they can depress MP earnings and buy up the stock for $20 a share instead of $60. They can’t eliminate their only competition but they can buy it on the open market. I’m staying very long MP because this can’t last too much longer. We knew that they already had 8% of the company long ago, I’m betting that they’re using straw men via their govt funded military cyber ops program that targets US businesses. Even checker players can sometimes see a couple of moves ahead, no need to be a master level chess player to see this coming.
lateralgs profile picture
Cash flows have been affected by capex for on-site processing plant and equipment recommissioning and new construction at the mine site. There have also been substantial commitments for the magnet manufacturing and materials facility north of Ft. Worth. These are investments for future profitability, not wasted cash burn. It is all growth related. Yet, the balance sheet is very strong, with more than adequate liquidity, not to mention government support at various levels. Finally, the company has reported a number of consecutive quarters of positive earnings in spite of the capex outlays.

There really is not a significant execution risk. It’s not rocket science. The technologies are well understood and will be well implemented with new, state-of-the-art facilities.

To me, the biggest risks are the future growth rate in the demands for the products, and the prices for the underlying commodities. MP should be well positioned if demand does continue to grow. It’s not for nothing the U.S. D.O.D. has supplied funding. The materials being produced have many applications in both the private and public spheres, all the way up to and including critical national defense applications.
$MP buy America; w/7.7% of Float shorted.
@Hugh Arhue $MP, American RE source; $23.36 ; w/9.95% of float shorted.
Burt Rothberg profile picture
Mp is transitioning from a mining company to a specialty chemical company. The mining was the easy part. The processing and conversion into magnets is the hard part. If you look closely at their documents, you will see that there are over a dozen steps that have to be done, some of them quite tricky.
Also remember that this processing is new to N. America, even tho we developed the tech years ago.
So there is a real execution risk. OTOH, I wouldn't worry about China buying them cheap. This is a strategic priority of the West. We will see more of this type of stuff: www.bis.doc.gov/...
Investor since ‘73 profile picture
A couple of observations. First, comparing MP’s P/E to the overall mining sector has little meaning to my thinking regarding it’s valuation because there is literally no other miner on the continent mining vital rare earths. Also, the deposit at Mountain Pass has concentration levels that are several magnitudes greater than other known deposits. Lastly, MP is now refining ore at it’s operational Phase 2 plant and soon, the magnet plant in Texass will be in operation too.

Then we get to the price of the rare earths being depressed, despite raging demand for EVs and wind turbines. Hmmm, why is that? The Chinese currently have near total control of the rare earth market. They realize that they can’t stop the competition from MP but they can buy it on the open market. MP stock was sailing along at 60, last year they owned 8% of the company but by using their well documented military cyber ops and online trolls, targeting US businesses to manipulate the price of the commodity down, they could drive the price of the stock price down with it. What an easy way to buy this company at a huge discount! Rest assured, once they’re done accumulating shares the price of rare earths stock return to previous levels. Sure it’s just a few Billion$ but as they say, a few billions here and a few billions there, pretty soon it’s real money.

I believe MP is a raging value at anything close to current price levels. It’s overweight in my portfolio and I have no doubt that in 2 years it’s going to be trading much higher.
@Investor since ‘73 I’m so glad our government was right on top of this. Great job.SMH
Investor since ‘73 profile picture
@Bogie 1 MP got the permits, went public, reopened the mining operation, began building out the phase 2 refining plant all before the Inflation Reduction Act provided $ for any of MP’s moves to help us break the total dependence upon China for the rare earths. Any additional funding made available recently is welcome but after the fact. We’re finally past that dark time when clownish bluster and posturing pretending to be tough on China, all while the boss’s kids were being granted all kinds of copywrites, see link:

JohnReno profile picture
@Investor since ‘73 The China cyber ops impact on the price is often overlooked and significant. For investors with conviction, it simply presents a buy opportunity.
JohnReno profile picture
This is a long play and requires patience. But they have a strong plan and have been executing it well to date.
What about stage 2, and stage 3 in your valuation? How does that change the p/e outlook when MP moves up the value added chain? Would they still be expected to keep in line with the p/e of miners?
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