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MP Materials Corp.
MP-N
PARTIAL BUY
Nov 11, 2024
Stock price when the opinion was issued
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Premium contentPremium contentPremium contentOur Mission is to restore the full rare earth supply chain to the United States of America. MP Materials owns and operates Mountain Pass, the only integrated rare earth mining and processing site in North America. Our success will drive the onshoring of jobs, national security and a carbon-reduced future. Social media mentions are up 1200% in the past 24h.
Certainly the company has a scarcity value, and recent news (The Pentagon investment and AAPL's contract) are extremely positive overall. There is a FOMO trade happening here, but it is important to note that the company has lost money in the past two years, with 35c in EPS expected next year. This makes it 'not cheap' certainly at 171X earnings. EPS could accelerate, though, and in a positive market investors are caring less on valuations. But we think we would side with caution for the moment. The likelihood of another big deal in the short term we think is low, and we think this excitement will fade, at least a bit, and we would prefer to let the stock consolidate recent gains. It still has a 23% short interest and part of the recent gains are clearly from panicked short sellers covering, and this made fade.
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MP shares have done a bit better than the sector, which has been weak. MP has $866M in cash and $945M in debt. It did have slightly negative cash flow in the last 12 months but its balance sheet is strong. It will lose money on price weakness this year but is expected to earn 14 cents per share in 2025. Insiders own 13% and there has been a little bit of selling this year. All in, we would consider it a decent company for rare earth exposure, but not a 'must buy' at all.
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