Key Points
MP Materials is a U.S.-based company that provides a unique opportunity for gaining exposure to rare earths.
The Department of Defense is making a substantial investment in the company in an effort to strengthen the nation’s security.
Shares have soared so far in 2025, and potential investors may want to wait for a pullback.
10 stocks we like better than MP Materials ›
With shares climbing 113% through the first half of 2025, there are certainly a lot of new investors in rare earths producer MP Materials (NYSE: MP). But investors are sitting up and taking notice of a notable new investor — Uncle Sam. The company announced a new deal with the United States Department of Defense, and investors are enthusiastically expressing their approval.
As of 10:31 a.m. ET, shares of MP Materials have skyrocketed 50.6% higher.
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Digging into the deets of the new deal
In an effort to expedite the development of the domestic end-to-end rare earth magnet supply chain — and shore up the nation’s security by reducing its dependence on China and others for rare earths — the Department of Defense has entered into a public-private partnership with MP Materials.
The Department of Defense is providing “a multibillion-dollar package of investments and long-term commitments” that will assist the company in developing a second magnet manufacturing facility in the U.S.
According to the agreement, the Department of Defense will purchase $400 million of a newly created series of preferred stock that’s convertible into shares of the MP Materials common stock as well as a warrant permitting the Department of Defense to acquire additional shares of common stock.
As a result of the agreement, the Department of Defense is poised to become the largest shareholder of MP Materials stock.
Should potential investors follow Uncle Sam’s lead?
The new deal with the Department of Defense may very well turn out to be transformational for MP Materials, and the market’s enthusiasm is understandable. With the stock’s impressive rise since the start of the year, however, those looking to load up on the mining stock may want to wait for a pullback as the market’s exuberance tapers off.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.
