USA Rare Earth Inc. (USAR) saw its stock plummet 5.41% in regular trading on Wednesday, despite an earlier pre-market surge and positive news in the rare earth sector. The stock's decline comes as a surprise following a report of a significant deal between Apple and MP Materials, which initially boosted several companies in the rare earth industry.

The day started on a promising note for USA Rare Earth, with pre-market activity showing the stock up nearly 7%. This initial enthusiasm was fueled by news that Apple had signed a $500 million agreement with MP Materials for rare earth magnets to be supplied from its Texas-based facility. The deal highlighted the growing importance of rare earth elements in technology supply chains and initially lifted several companies in the sector.

However, the positive momentum for USA Rare Earth was short-lived. Despite a Canaccord Genuity analyst suggesting that the Apple-MP Materials deal "creates room for other magnet manufacturers, including USA Rare Earth," investors appeared to take profits and reassess the company's position in the competitive landscape. The stark reversal from pre-market gains to a significant intraday loss suggests that traders may have initially overreacted to the sector news before a more careful evaluation of USA Rare Earth's specific prospects in light of the Apple deal with its competitor.