The Bull Case For MP Materials (MP) Could Change Following Major US Funding and Apple Supply Deal

• In recent days, the U.S. government announced major support for domestic rare earth supply, guaranteeing minimum prices and providing over US$500 million in funding and purchase commitments to MP Materials, while Apple also agreed to invest US$500 million for rare-earth magnet supply from the company.
• This effort underscores MP Materials' pivotal role as a geostrategic partner in the U.S. push to reduce reliance on China for critical minerals, despite ongoing challenges such as rising production costs and near-term losses.
• We'll now assess how these new government investments and long-term contracts could influence MP Materials' investment outlook and risk profile.

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MP Materials Investment Narrative Recap

To be a shareholder in MP Materials, you need to believe in the company’s long-term importance to the U.S. rare earth supply chain, which is now reinforced by sweeping government price guarantees and funding commitments. While this support may ease worries about short-term revenue and price volatility, the most pressing risk continues to be elevated production costs from ramping up separated product output, which is already impacting margins and near-term profitability.

Among recent announcements, the US$500 million contract with Apple stands out, given its direct connection to growing downstream magnet demand and added commercial visibility for MP Materials’ planned output. This long-term partnership, along with the latest government support, provides increased confidence in the company’s ability to scale U.S. magnet production, a key catalyst for future earnings growth.

However, despite the optimism around government and commercial contracts, investors should also be aware that as production of separated rare earth products increases, costs could remain elevated and...

Read the full narrative on MP Materials (it's free!)

MP Materials' narrative projects $655.9 million revenue and $101.4 million earnings by 2028. This requires 47.6% yearly revenue growth and a $166.8 million earnings increase from the current earnings of -$65.4 million.

Uncover how MP Materials' forecasts yield a $50.67 fair value, a 20% downside to its current price.

Exploring Other Perspectives

Seventeen private investors in the Simply Wall St Community value MP Materials between US$2.84 and US$59 per share. With persistently rising production costs continuing to pressure margins, opinions on future performance vary widely, explore what these different viewpoints could mean for your own outlook.

Explore 17 other fair value estimates on MP Materials - why the stock might be worth as much as $59.00!

Build Your Own MP Materials Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your MP Materials research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
• Our free MP Materials research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate MP Materials' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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