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MP Materials downgraded at Northland as NdPr prices nosedive

Apr. 18, 2023 10:14 AM ETMP Materials Corp. (MP)By: Carl Surran, SA News Editor20 Comments

Modern industry depends on mining for the valuable rare-earth, rare earth crystal detail

Joaquin Corbalan/iStock via Getty Images

MP Materials (NYSE:MP) -4.3% in Tuesday's trading as Northland Capital downgraded the stock to Market Perform from Outperform with a $32 price target, cut from $48, saying falling NdPr prices bode ill for the company's revenues.

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Comments (20)

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Investor since ‘73 profile picture
This is getting ridiculous.
1to3 Investing profile picture
@Investor since ‘73 absolutely agree. I am buying more.
G
LAS VEGAS--(BUSINESS WIRE)-- MP Materials Corp. (MP.NaE) will release its financial results for the first quarter ended March 31, 2023, after the U.S. markets close on Thursday, May 4, 2023.

MP Materials’ management will host a conference call and webcast that afternoon at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Prior to the conference call and webcast, MP Materials (MP.NaE) will issue a press release and post a slide presentation at investors.mpmaterials.com/...

Conference Call Details

Event: MP Materials (MP.NaE) Q1 2023 Financial Results Conference Call and Webcast
Date: Thursday, May 4, 2023
Time: 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)
Webcast: investors.mpmaterials.com/...
G
MP's stock price is down because the NdPr market pricing has softened by 30%, since January, causing MP's sales revenue to drop as well.
Investor since ‘73 profile picture
@GHOUND Who controls the price because they control the entire market for rare earth metals? Who benefits most from buying the stock for $25 instead of $60 of the only competitor that you can’t prevent from entering the market? The Chinese owned 8% of the stock last we heard, interesting to know how much they and their straw men now own.
G
@Investor since ‘73
"Who controls the price because they control the entire market for rare earth metals?"
As of 12/2022, China accounted for approximately 63 percent of the world’s rare earth mining, 85 percent of rare earth processing, and 92 percent of rare earth magnet production.

"Who benefits most from buying the stock for $25 instead of $60 of the only competitor that you can’t prevent from entering the market?"
Pretty obvious, investors that bought at $25/ share.

"The Chinese owned 8% of the stock last we heard, interesting to know how much they and their straw men now own."
Agreed.
David Benson profile picture
Friends - I'm finding Northland Capital's reasoning hard to understand.
They state that "it is getting incredibly hard to be bullish on materials that are highly dependent on China." If China & US are seeking leverage over each other by restricting access to key pain points in trade and MP is the best hope the US has for breaking China's grip on rare earths, then wouldn't tensions with China be bullish for MP!? What am I missing here?
1to3 Investing profile picture
@David Benson Your logic seems sound to me. (Of course, that is also my opinion.)
J
@David Benson I thought the same thing. The author's comment seems to lack common sense. If China cuts the supply/accessability of NdPr, then that is very good for MP. It's more likely that China will artificially boost production to reduce prices to drive MP out of business. But it is too late for that to work.
1to3 Investing profile picture
@JRusch Exactly. The earlier history of MP shows that they have been through that battle before, and lost. With U.S. backing, as well as numerous customers lined up already, it seems a bit less likely - but China can crash the price anytime they wish. (That's how they got a stranglehold on the market in the first place.)
L
Blah blah blah, scare tactics and noise and will ignore them all. In 5 years, when this is trading for around $150-$200, Northland will be no where to be found. Cheers 🥂
j
@Lord TGO Investment Hit a 52-week low today, increased my holdings by 30%
L
@jermyzy heck yeah, I bought some more today too.
1to3 Investing profile picture
@Lord TGO Investment Same here... but doubled my position. (Was a small position.)
China really controls the pricing of nearly everything MP can produce, but it is one of the few that may ever produce in the U.S. so I see it as a strategic necessity for the country.
pro8 profile picture
Uncertainty around U.S.-China trade policy could put a lid on NdPr prices... I find that to be an oxymoron if anything ... that could increase prices as China at any time could cut exports driving up prices as they know we are dependent and MP is building the US infrastructure to cut that dependency CMIIW
Investor since ‘73 profile picture
Yes, Northland Capital. The market hangs on their every word!!

The current swoon in MP stock is a gift to investors as Phase 2 begins refining rate earths and stops being a drain on earnings now that construction is completed. Phase 3, the high tech magnet facility with GM awaiting the finished product is well on it’s way towards completion. While Tesla may or may not ever eliminate use of rate earths, the demand will remain strong and MP will be the only domestic source.

I believe that the Chinese, who currently have a lock on this market realize that they can’t stop the competition. By using their government funded cyber ops, they have been able to manipulate the market to cut the price in half, so that they can use their deep pockets to increase their ownership of MP from the 8% stake they had when last we knew.

The future of MP is white hot and having a 2 year investment horizon, which is always my goal, this is a stock that I’m very happy to own.
Lord Krungharr profile picture
@Investor since ‘73 Man, I hope you're right! I'm sinking fast and have no cash left in my Roth to average down more....though perhaps I ought to wait a bit more. I'm up on my BRK-B, I could dump that into MP and get down below $30 I think. The sensitivity to commodity prices is the Achilles-heel to miners, but like you say, I just can't see the demand for the REE for high quality magnets dimming anytime soon, despite all the research in the other iron-nitride versions, which by the articles I've read still won't have the 'gauss' or whatever that magnetic strength is called that the neodymium versions have.
Investor since ‘73 profile picture
@Investor since ‘73 Both instances of RARE earths above had rate earths instead and I am not able to edit my comments. Maybe because I rely on my phone?
Investor since ‘73 profile picture
@Lord Krungharr I try to never allow any single stock to become more than 5% of my portfolio, but in what I believe to be extraordinary circumstances, I will go as high as 10%. Right now MP is at about 7%, which shows how bullish I am in my belief that in the next 2 years we will see a return to previous highs of a year ago. Best of luck and please remember to stay balanced.

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