MP Materials Stock Tanks: Here’s Why Monday Was a Bloodbath
Another brutal day for rare earths as MP Materials gets hammered—Wall Street's latest casualty in the commodity crunch.
What snapped? No clear catalyst, just the market's merciless re-pricing of mining stocks amid slowing EV demand. The usual suspects: inflation fears, supply chain kinks, and that pesky recession looming like a hangover.
Behind the plunge: Shorts piled on after whispers of delayed Mountain Pass expansion permits. Meanwhile, Beijing's export quotas on rare earths—again—left traders sweating over margins.
Silver lining? Maybe for vultures circling at 52-week lows. But let's be real: when hedge funds 'buy the dip' these days, it's usually with someone else's money.
Knocked down a peg
The downgrading party was CFRA's Matthew Miller, who that morning changed his rating on MP Materials to buy from its previous strong buy. In doing so, however, he raised the price target on the shares considerably, to $88 apiece from $68.
Image source: Getty Images.
Investors clearly focused on the recommendation downshift rather than the price target boost. This might be due to the fact that Miller is still counting on the company to book a net loss this year, according to reports.
While he feels that the rare earth specialist will mine a far higher earnings before interest, taxes, depreciation, and amortization (EBITDA) figure than previously anticipated -- Miller raised his estimate for this to $850 million from $650 million for this year -- it should still land in the red on the bottom line.
He's now modeling a $0.10 per share deficit, which, although much narrower than his previous $0.36 net loss estimate, is still a considerable below-the-waterline figure.
Rocky times
As we're in the thick of a rather stop-and-go trade war with foreign partners (particularly with China, a big national consumer of rare earths), MP Materials' business is volatile at the moment. It can be hard to get a fix on the company's prospects, although its position as the sole rare earth pure-play in this country is inherently valuable. The stock, then, is always worthy of consideration as a buy.
