Al Root

The rare-earth industry is never dull. After endless reports of government deals, shortages, and capacity additions, MP Materials added to the drama with a strong, but mildly confusing, quarterly result.

The company reported much better-than-expected fourth-quarter earnings. Shares, however, fell after results were released. That might change when investors sort through the math.

On Thursday afternoon, the rare-earth miner and processor reported quarterly earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $39.2 million on sales of about $53 million. Wall Street was looking for about $34 million in Ebitda and $60 million in sales.

Investors should focus on Ebitda, not sales. This is the first quarter in which the price protection agreement with the Department of Defense was in effect. It ensures that MP receives the equivalent of $110 per kilogram for key rare-earth products. Payments to the company under that agreement aren't recorded as revenue.

The profitability is impressive. Still, MP stock dropped 1.9% on Friday to $58.87, while the S&P 500 and Dow Jones Industrial Average were off 0.4% and 1.1%, respectively.

Ebitda was expected to improve significantly with essentially no sales growth because MP is shifting from selling intermediate products to higher-value rare-earth materials. In the fourth quarter of 2024, it sold 7,802 metric tons of rare-earth oxide and 468 metric tons of neodymium-praseodymium, or NdPr, alloy. In the third quarter of 2025, it sold no rare-earth oxide and 525 metric tons of NdPr.

For the fourth quarter, MP sold 562 metric tons of NdPr, and produced its first neodymium-iron-boron magnets at its facility in Texas.

NdPr realized pricing in the third quarter was $59 per kilogram, up from $51 in the fourth quarter of 2024. NdPr pricing wasn't reported for the fourth quarter because of the $110 price flow.

It's worth noting that NdPr prices are now above $110 per kilogram, according to Canaccord analyst George Gianarikas. Along with the price floor, the Defense Department's agreement included equity and an offtake agreement for new magnet capacity MP is building.

The NdPr price rally "indicates that China's long-standing, administratively managed pricing regime, despite strong demand from electrification and robotics, may be starting to ease." China dominates the global market for rare earth products, a key reason that the Defense Department decided to invest in American production.

Gianarikas rates MP stock Buy and has a $60 price target. In a Thursday report, he said the company made "good progress during the quarter."

Since the July MP deal, the federal government has continued to invest in critical minerals and sign deals with other countries for mineral access. There have also been threats of Chinese export restrictions, rare-earth shortages, and companies announcing plans to enter the newly hot space.

MP had news beyond earnings, too. It announced it had signed a "significant NdPr oxide offtake agreement with [a] new strategic OEM," and received a $200 million local government incentive package for its new magnet facility in Northlake, Texas.

The Northlake facility will cost about $1.25 billion and is on track for commissioning in 2028. When completed, MP should produce about 10,000 metric tons of rare-earth magnets annually.

Gianarikas recently estimated that U.S. rare-earth magnet demand is about 50,000 tons a year. It is growing with the advent of electric vehicles, robots, and more sophisticated military technology. Magnets are the number one use for rare earth materials by volume and dollar value.

A lot is going on at MP and in the industry. That volatility has shown up in the stock. MP shares have ranged from $18.64 to $100.25 over the past 12 months. At $60.50 a share before the opening bell on Friday, MP stock was up more than 150% over the past 12 months.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 27, 2026 16:23 ET (21:23 GMT)

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