To The Moon

Abstract: $MP Materials Corp.

• $MP Materials Corp.(MP)$ has become a core company in the "de-Chinaization" strategy of the U.S. rare earth industry chain.Events such as the Pentagon's shareholding and Apple's cooperation have signaled that the company has moved away from the category of a pure commercial company to that of a "strategic asset".

• The company is now accelerating vertical integration: from valley mineral mining to magnetic material manufacturing, covering the entire chain of light and heavy rare earths; 10X Texas plant + California recycling facility has begun to take shape.

• In terms of valuation, the company's PS has improved dramatically: the stock price once exceeded $60, and the PS over the past 12 months is at over 44x, far exceeding even the level of SaaS and AI industry leaders.The valuation reflects the market's appreciation of the company as a scarcity premium, and there are few companies in the market that command such a premium, and $Palantir Technologies Inc.(PLTR)$ is one.

• The current market is well liquid and actively traded, and is of interest to both retail and institutional investors.

• Changes in policy and tariffs are a major positive, especially the Biden administration's new round of tariffs on China and the rare earth procurement provisions in the National Defense Act, which provide market protection for MP Materials.

MP Materials has transformed itself from a "resource-based exporter" to a core performer in the "re-emergence of the U.S. rare earth industry".Although there are still risks of heavy rare earth capacity creep and high valuations, its policy position and depth of cooperation make it a long-term strategic value.

The Pentagon and Apple's shareholding

In early July, the U.S. Department of Defense announced a strategic investment in MP Materials totaling up to $550 million, including a $400 million preferred stock investment with a $150 million low-interest loan, and a ten-year minimum purchase price guarantee agreement for its core rare earth product, NdPr magnets.Meanwhile, $Apple(AAPL)$ Inc. has also signed a long-term cooperation agreement of about $500 million with MP to purchase its U.S.-manufactured rare-earth permanent magnets for use in product lines such as iPhones and AirPods.

From a national security perspective, the magnets relied on by U.S. military radars, missiles and F-35 fighters must be gradually weaned away from dependence on overseas rare earths, so the Department of Defense is ensuring industry chain security through capital injections and procurement commitments.From the perspective of technology supply chain, large enterprises such as Apple are facing geopolitical pressure and have started to take the initiative to localize the supply of key raw materials; MP Materials' vertical integration capability, ability to control scarce resources, and local production capacity in the U.S. have become the core foundation for the implementation of these collaborations.

Current Business Layout and Performance

MP Materials' current operations range from upstream mining to downstream magnet manufacturing, with its core assets including the Mountain Pass rare-earth mine in California, which is considered one of the world's highest known light rare-earth resources in terms of rare-earth content.In the midstream, the Company has constructed the "Stage II" separation facility with an annual production capacity of 15,000 tons of rare earth oxides, including 5,000 tons of NdPr.At the same time, the Company is advancing its "10X" project in Fort Worth, Texas, where it plans to build a complete rare earth magnet manufacturing line.In addition, the company has set up a rare-earth magnet recycling facility in California, in line with Apple's recycling strategy, to recover rare-earth components from electronic products for reuse.

As of 2024, the company achieved revenues of about $400 million, up 5% y/y. NdPr production increased 20% y/y to 4,300 tons, gross profit declined slightly, and adjusted EBITDA was $105 million, down 15% y/y, mainly due to expansion of investment spending.Particularly noteworthy is the increase in the company's own separation and processing ratio from less than 10% to 46%, marking a key transition from reliance on overseas separation facilities to self-control.

In addition, the proportion of exports to China has dropped to less than 10% and may stop completely in the future.

Valuation analysis: Scarcity and policy-driven premiums

MP Materials shares are currently trading in the $48-$60 range, with a market capitalization of $9.5 billion at the close of trading on July 15th.

Based on revenue of $216 million over the past 12 months, the price-to-sales (PS) ratio reached 44 times, much higher than the usual 1 to 3 times of the average mining company, far more than the level of SaaS and AI industry leaders, the whole market so exaggerated valuation can only be Palantir (with the concept of defense).

The formation of this valuation is mainly attributable to the following logic.

First is global scarcity.Except for China and Australia, MP is the only listed company in the world with a complete industrial chain from mining to magnet manufacturing.Secondly, it is policy-driven.The Pentagon's strategic investment and Apple's cooperation, from commercial enterprises to "strategic assets" upgrade, the market is expected to enjoy long-term stable orders and policy support.In addition, due to the current company is still in large-scale investment period, profit release lag, earnings have not been fully realized, valuation to forward cash flow and policy dividend expectations.

Although the valuation premium is obvious, but there is also a certain risk.If the rare earth price goes down in the future, or the company encounters obstacles in the process of mass production of heavy rare earths, the PS valuation may encounter a pullback.

According to the latest price target updates from mainstream brokers, Canaccord raised its price target from $32 to $55, Baird raised its price target from $27 to $58, and Morgan Stanley raised its price target to $60, and maintains "Hold" rating.

Stock Liquidity and Market Focus

MP Materials is actively traded in the U.S. stock market, with average daily turnover exceeding $100 million and market capitalization exceeding $8 billion.The company has been included in $ARK Autonomous Technology & Robotics ETF (ARKQ)$, $Materials ETF (XLB)$ and other mainstream ETF products, favored by active and passive funds.Meanwhile, the company is highly discussed on social investment platforms such as Reddit, combining retail investor enthusiasm with institutional recognition.

From a liquidity perspective, MP has all the trading characteristics of a mid-to-large cap growth stock and may be widely included in more mid-to-large ETFs in the future.

Policy Environment and Tariff Factors

In June 2025, the U.S. announced a 25% tariff on Chinese imports of rare earth permanent magnets, formally bringing such products into the scope of sanctions.At the same time, the U.S. passed a new version of the Defense Production Act Amendments, clarifying that military magnets must not come from China and requiring military suppliers to prioritize the procurement of local rare earth raw materials and products.

In addition, the Biden administration also passed the Critical Minerals Autonomy Act, which provides U.S. companies, including MP Materials, with tax credits, loan guarantees, R&D grants, and other support mechanisms to accelerate the restructuring of the domestic supply chain for critical raw materials.

These policies constitute substantial benefits for MP.On the one hand, the tariff policy raises the cost of Chinese products, which indirectly improves MP's price competitiveness.On the other hand, government procurement and the "minimum price protection" mechanism provide price bottom protection and reduce the company's exposure to cyclical fluctuations.