MP Materials Corp. (NYSE: MP) stock plummeted 5.07% during intraday trading on Monday. The sharp decline came despite initial positive sentiment in the rare earth sector earlier in the session.

The movement appears to be driven by market reassessment of the Trump administration's announced $1.6 billion investment in rival miner USA Rare Earth Inc. (NASDAQ: USAR). According to reports, the U.S. government will acquire a 10% stake in the Oklahoma-based company, which holds substantial U.S. deposits of heavy rare earths. This investment, part of a broader strategy to secure domestic critical mineral supplies, positions USA Rare Earth as a newly formidable, government-backed competitor in the sector.

While the news initially sparked a sector-wide rally in premarket trading, investors later seemed to focus on the competitive implications for MP Materials. The company, in which the administration previously acquired a 15% stake, now faces intensified rivalry for government support and market share in the domestic rare earth supply chain.