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The Futility of MP Materials Corp. (MP)’s Fundamentals

MP Materials Corp. (MP), formerly Mountain Pass Mine, returned to the public market under its new name in the fall of 2020. What happened to the conditions that made it possible for a company to become an attractive investment destination?

MP Materials’ primary objective is to source raw materials to manufacture neodymium magnets, required for electric motors and generators that are compact and powerful. Electric scooters and wind farms, as well as submarines and power plants, all utilize these magnets. Motors made from neodymium are several times lighter than traditional motors. Various types of equipment can benefit from this advantage. In the United States, MP Materials are mined at a former Mountain Pass Mine’s mine.

In the past, the mine has been bankrupted due to huge debts and sold to private hands. Due to the cost of obtaining and expanding rare earth metal production, MP Materials Corp. (MP)also attracts debt capital. Recently, the MP stock announced the issuance of $ 600 million worth of notes. During the fourth quarter, profits rose by 2225 % to $24.1 million due to nuances in tax payments accounting calculations.

Meanwhile, the situation is a bit different now than it was five years ago. The US military supported the extraction of MP Materials because it does not wish to be completely dependent on Chinese imports. MP Materials will almost certainly acquire anything they mine, even if subsidies need to be applied.

MP Materials’ fourth-quarter revenue was $42.2 million, up 100% from the prior year. The MP Materials Corp. expects to achieve full-year profit and is one of the few major neodymium producers in the world. Nonetheless, all resources will only be available to the MP stock from 2022 (pure oxides, not raw materials).

Currently, MP Materials Corp. (MP) shares are trading at about $35, which means its share value has increased by 257.87% from its 52-week low. MP shares hit a high of $37.82 and a low of $34.50 in intraday trading. Recently, shares of the company have touched ranges of $51.77 and $9.78, while the intraday change in MP stock was just -3.34%.

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