MP Materials Corp

Key Reasons for Buy

Commercial and Operational Milestones in Q4 2024: In the fourth quarter of 2024, MP Materials achieved several key operational milestones. The company commenced commercial production of neodymium-praseodymium (NdPr) metal at its Independence facility and began trial production of automotive-grade magnets. It also reached record quarterly production of 11,478 metric tons of rare earth oxides (REO) in concentrate, despite undergoing a planned maintenance shutdown, and sold 7,803 metric tons. In addition, MP produced 413 metric tons of NdPr oxide and sold 468 metric tons.

Financial Performance for Q4 and Full Year: Revenue for the fourth quarter rose 48% year-over-year to $61.0 million, driven by increased sales of NdPr oxide and metal. However, despite the growth in revenue, the company reported a net loss of $22.3 million for the quarter and an adjusted EBITDA of negative $10.7 million, primarily due to increased production costs associated with the ramp-up of separated product production. For the full year, revenue declined 20% to $203.9 million due to lower realized pricing and reduced REO sales volume, resulting in a full-year net loss of $65.4 million and adjusted EBITDA of negative $50.2 million.

Production Growth and Customer Engagement: MP Materials set annual production records in 2024, with 45,455 metric tons of REO in concentrate and 1,294 metric tons of NdPr oxide produced. The company secured important commercial agreements, including NdPr supply contracts with a major global automaker and the U.S. Department of Defense. Furthermore, it received $100.0 million in customer prepayments for magnetic precursor production and was awarded a $58.5 million Section 48C tax credit to support operations at its Independence facility.

Materials Segment Analysis: Within the Materials Segment, Q4 revenue grew to $61.0 million, up from $41.2 million in the prior year quarter, largely due to the commencement of NdPr oxide and metal sales. However, adjusted EBITDA for the segment dropped to negative $1.3 million, down from $9.2 million in Q4 2023. The decline was attributed to higher production costs and a $6.4 million inventory write-down, which was partially offset by an $8.4 million Section 45X tax credit. For the full year, the segment reported a $14.1 million adjusted EBITDA loss due to lower REO prices, higher inventory write-downs, and increased property taxes, despite receiving $12.2 million in tax credits.

Magnetics Segment Performance: The Magnetics Segment reported adjusted EBITDA losses of $3.1 million and $12.2 million for Q4 and the full year, respectively, compared to losses of $2.4 million and $6.5 million in 2023. These declines were largely driven by increased selling, general, and administrative expenses, reflecting higher personnel costs, research and development investment, and property taxes related to scaling up operations at the Independence facility.

Capital Structure and Strategic Initiatives: Throughout 2024, MP Materials made strategic financial moves, including repurchasing 15.2 million shares—equivalent to 8.6% of outstanding shares—for $225.1 million at an average price of $14.76 per share. The company also strengthened its capital structure by extending most debt maturities to 2030 and retiring over 90% of its 2026 convertible notes at a discount. These actions are indicative of proactive financial management aimed at long-term stability.

Technical Commentary:

MP's stock price has formed robust support levels and is consistently rising, indicating a potential for ongoing upward momentum in the near future. The 14-period RSI has surged above the midpoint, suggesting a forthcoming rebound. Additionally, the stock has regained its 50-day Simple Moving Average, which further reinforces a positive outlook. This situation contributes to an optimistic perspective.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to MP Materials Corp. (NYSE: MP) at its current market price of USD 25.82 as of April 14, 2025 (6:45 am PDT).