MP Materials Stock Skyrockets: Here’s Why Traders Are FOMOing In

Rare earth miner MP Materials just pulled a Friday miracle—shares surged double-digits while Wall Street analysts scrambled to update their spreadsheets. Was it fundamentals, hype, or just another case of 'buy first, ask never'?

The catalyst no one saw coming

Supply chain whispers sent shockwaves through the sector—turns out owning the only US rare earth mine matters when geopolitics gets spicy. Short sellers got steamrolled as institutional money piled in.

Pump or paradigm shift?

The usual suspects (momentum algos, gamma squeezes) definitely played their part. But with EV demand eating up global supply, this rally might have legs—assuming management doesn't blow the cash on executive bonuses and 'metaverse mining' initiatives.

Another reminder that in today's market, fundamentals are just decorations for the chart goblins. Happy trading—try not to get left holding the bag this time.

Image source: Getty Images.

MP Materials' Q2 earnings

Sales surged 84% year over year, with rare-earth oxide production up 45% and NdPr production more than doubling. MP is still selling off most of the rare earths it mines -- 74%. But the company's keeping more for itself, and used it to create and sell $19.9 million worth of magnets.

One unhappy note worth highlighting: MP lost only $0.13 after backing out one-time costs. With costs included, the company's loss as calculated according to generally accepted accounting principles (GAAP) was much closer to analysts' forecast: $0.19 per share.

Still, this was less than MP lost in last year's Q2.

Is MP stock a buy?

MP Materials stock skyrocketed in July after the Department of Defense invested $400 million in company stock in order to boost the magnets business and secure U.S. supply chain access to these invaluable components. Investors seemed to think that if the government was investing in MP stock, then it must be a sure thing.

I'm not so sure about that.

MP has lost $53.5 million so far this year, and burned through more than $126 million in cash. Even with sales surging, I'm going to want to see the company prove it can generate consistent, solid profits before buying into MP.