MP Materials (MPM) saw its stock decline in December due to weakening rare earth production forecasts and elevated operational costs, yet analysts project a significant rebound by 2026 fueled by rising domestic demand for clean energy components and strategic U.S. supply chain initiatives.
- MPM stock dropped 18% in December 2025 due to 12% NdPr production shortfall and 23% year-over-year cost increases
- Mountain Pass facility faces ongoing operational challenges, including power supply and maintenance delays
- Government funding and private investment totaling $1.2 billion support a 40% capacity expansion by Q2 2026
- Projected 65% stock surge by end-2026 tied to rising U.S. demand for rare earths in EVs and defense
- Global rare earth demand expected to grow at 9.3% CAGR through 2030, with U.S. demand doubling by 2028
- New separation facility to cut long-term processing costs by up to 30% and reduce foreign refining dependence
MP Materials (MPM) experienced a notable drop in its stock price during December 2025, with shares falling 18% over the month amid concerns over delayed output from its Mountain Pass facility in California. The decline followed a quarterly report that revealed a 12% shortfall in neodymium-praseodymium (NdPr) production, attributed to extended maintenance and power supply constraints. Additionally, higher-than-expected processing costs—up 23% year-over-year—eroded margins and triggered investor caution. The underlying issue stems from the company’s pivotal role in the U.S. rare earth supply chain, where it is the only domestic producer of high-purity rare earth oxides. With China dominating over 80% of global rare earth processing, U.S. defense and clean energy sectors have intensified efforts to reduce reliance on foreign sources. This national strategic imperative has elevated the importance of MPM’s operations, particularly for permanent magnets used in electric vehicles and wind turbines. Looking ahead, analysts project MPM’s stock could surge 65% by the end of 2026, driven by a combination of government-backed incentives, a 40% expansion in processing capacity at Mountain Pass by Q2 2026, and a growing contract backlog with U.S. defense and EV manufacturers. The company has secured $1.2 billion in federal funding and private investment to support a new separation facility, which is expected to reduce reliance on overseas refining and lower long-term production costs by up to 30%. The anticipated rebound is also tied to broader market dynamics: global demand for rare earth elements is projected to grow at a 9.3% CAGR through 2030, with U.S. demand expected to double by 2028. MPM’s ability to scale output and diversify its product mix—including increased production of dysprosium and terbium—positions it to capture a larger share of this expanding market, particularly as supply chain resilience becomes a top priority for industrial and defense sectors.