MP Gains 15% Despite Q2 Earnings Miss: How to Play the Stock?

The stock has also lagged other players in the rare earths space like Lynas Rare Earths Limited LYSDY and Energy Fuels UUUU, which advanced 55.4% and 29.8%, respectively, in the same timeframe.

MP’s Price Performance Against Industry, Sector, S&P 500 & Peers

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Before addressing the critical question of how investors should position themselves regarding the stock, let us first review the company’s second-quarter results.

MP’s Q2 Results Show Strong Revenue Momentum

MP Materials produced 840 metric tons of NdPr, up 41% year over year, while NdPr sales volumes surged 127% to 1,006 metric tons. However, MP reported no rare earth concentrate sales reflecting its decision to halt these sales to China in July 2025.

The Materials segment generated revenues of $95.6 million, up 155% year over year, driven by stronger NdPr sales volumes and pricing, partially offset by the absence of concentrate sales.

The Magnetics segment generated revenues of $16.5 million in the second quarter, down 17% year over year. While the segment benefited from an increase in the production of magnetic precursor products at the Independence Facility, revenues were down due to the start-up of magnet production and related pricing mechanisms.  

Total revenues rose 89% year over year to $108.5 million. MP also recorded $17.58 million in income tied to a price protection agreement (PPA) with the Department of War (DoW).

Higher Costs to Keep Pressure on MP’s Earnings

Cost of sales climbed 43% in the second quarter due to higher sales volumes of NdPr oxide and metals. Selling, general and administrative expenses rose 28%, due to higher personnel costs to support its downstream expansion. Start-up costs surged to around $14 million from $0.76 million in the year-ago quarter due to the ramp-up of start-up activities for magnet production and chlor-alkali facilities, and costs associated with initial production of magnets at Independence. 

Despite higher costs, adjusted EBITDA improved sharply to $28.5 million from a loss of $12.5 million in the year-ago quarter, supported by higher revenues and PPA income.

The company’s adjusted loss narrowed to one cent per share from 13 cents. Higher adjusted EBITDA and interest income benefited earnings, partly offset by amortization related to the PPA upfront asset and higher interest expense mainly due to the July 2025 DoW loan to support the buildout of samarium oxide production.

Costs are likely to remain elevated as producing separated rare earth products and magnetic materials involves significantly higher costs than concentrate production, due to additional processing requirements, chemical inputs, labor and maintenance. Costs associated with magnetic precursor products and start-up costs are also likely to increase further in the coming quarters.

MP Sees Downward Revision Activity in Earnings Estimates

The Zacks Consensus Estimate for MP Materials’ 2026 revenues indicates a 102% increase year over year. The consensus estimate for 2026 earnings is currently pegged at 18 cents per share, suggesting a solid improvement from the loss of 24 cents reported in 2025. 

The consensus estimate for MP’s 2027 revenues suggests year-over-year growth of 72% with earnings expected to surge 445%.

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The Zacks Consensus Estimate for earnings for both 2026 and 2027 has moved down over the past 60 days.

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MP Materials Stock Trades at a Premium

MP Materials stock is trading at a forward 12-month price/sales multiple of 14.91X, a significant premium to the industry’s 1.42X. MP’s Value Score of F suggests that the stock is not so cheap and a stretched valuation at this moment. Energy Fuels trades at an even steeper multiple of 19.26X, while Lynas Rare Earths appears comparatively cheaper at 10.49X.

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Strategic Expansion & Partnership Strengthen MP’s Long-Term Prospects

MP Materials continues to benefit from strong demand for domestic rare earth materials and magnets. NdPr sales exceeded 1,000 metric tons for the second consecutive quarter, and the company expects production to exceed 1,000 metric tons in the third quarter.

The company remains on track to begin producing terbium and dysprosium later this year and expects first samarium production in 2028. MP recently entered into a multiyear agreement to supply gadolinium oxide to a leading U.S. aerospace and defense manufacturer. The deal is expected to be worth a sizable nine-figure amount.

During the second quarter, MP Materials delivered magnets to General Motors for in-vehicle qualification testing and expects to begin commercial shipments in the fourth quarter, followed by a steady production ramp. 

The company delivered magnets to General Motors for vehicle qualification testing in the second quarter and expects commercial shipments to begin in the fourth quarter, followed by a production ramp.

MP Materials has also worked with U.S. and allied drone manufacturers to launch Project Swarm, an industrial coordination initiative designed to aggregate and standardize future magnet demand. It has already signed subscription agreements with a number of participants. The company’s partnership with Apple on magnet recycling, magnet production and joint development also continues to advance. 

Meanwhile, construction of the 10X facility remains on track. The second U.S. rare earth magnet facility is expected to begin commissioning in 2028 and produce approximately 7,000 metric tons of magnets annually. Combined with the 3,000-metric-ton capacity of the Independence facility, MP’s U.S. magnet capacity is expected to reach 10,000 metric tons annually.

Should You Buy MP Stock Right Now?

MP Materials offers an attractive long-term growth story, supported by its strategic U.S. position, rising NdPr demand, expanding magnet production and partnerships with major industrial and technology companies.

However, the stock’s premium valuation, weak recent performance, rising operating and start-up costs, and downward estimate revisions temper the near-term outlook. Existing shareholders may consider holding the stock, while new investors may want to wait for a more attractive entry point. MP Materials currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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