Why USA Rare Earth Stock Gave Up Some Gains Today

Key Points

• MP Materials is signing rare earth magnet deals left and right.

• USA Rare Earth... isn't.

• MP Materials has revenue and a path to profit. Meanwhile, USA Rare Earth has some optimistic forecasts, but no revenue.

• 10 stocks we like better than Usa Rare Earth ›

Rare earths mining start-up USA Rare Earth (NASDAQ: USAR) stock has been on a roll this past week. Ever since rival miner MP Materials (NYSE: MP) signed its $400 million investment deal with the U.S. Department of Defense last week, investors have been betting that USA Rare Earth might be next in line to collect those sweet, sweet government subsidies for itself.

But that's looking like an increasingly bad bet.

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USA Rare Earth is no MP Materials

Shares of USA Rare Earth stock are down 7.1% through 1:55 p.m. ET Wednesday, and the reason is simple: USA Rare Earth is not MP Materials. Not even close.

In contrast to MP, which has active rare earths mining operations, a refining business gearing up, and a nascent rare earth magnets business too -- all generating more than $200 million in revenue last year, expected to grow that number 30% this year, and then nearly double revenue in 2026 -- USA Rare Earth collected revenue of zero dollars, zero cents last year.

This year should be similar, and while revenue may begin in 2026, it's unclear when, if ever, USA Rare Earth stock will turn profitable. Adjusted profits are expected in 2028, but no analysts have a date for when USA Rare Earth might earn a generally accepted accounting principles (GAAP) profit.

Is USA Rare Earth stock a sell?

Meanwhile, MP Materials has signed the Pentagon to a 10-year deal to buy rare earth magnets at guaranteed prices. And just yesterday, MP announced a separate, $500 million partnership with Apple to buy even more of its magnets.

With every passing day, it becomes clearer which rare earth stock both government and corporate America prefer to partner -- and its name isn't "USA Rare Earth."

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.