Let's face it, MP Materials has all the aspects and contours of a GameStop or MicroStrategy meme stock, starting with a well-honed equity story - the American rare earths producer could compensate for the export restrictions put in place by the Chinese government, which currently controls almost the entire global market via a state duopoly - and the support of a whole clique of dubious promoters.
The latter include the inimitable Chamath Palihapitiya, sponsor of the SPAC through which MP Materials went public five years earlier, among other SPACs that all ended badly; and an odd management team, led by three former hedge fund professionals and a legal director from the casino and gambling industry.
These things can't be invented. In 2022, when a series of promotional and frankly suspicious articles flooded the networks extolling the virtues of MP as an investment, MarketScreener first warned its readers. See MP Materials Corp: Too good to be true?
Since then, the Las Vegas-based group's stockmarket performance has been less than stellar. Production has risen, but sales have plummeted as rare earth prices have plummeted in the meantime. In 2023 and 2024, MP's activities burned through $372m, while the group's debt increased by roughly the same amount.
2025 could - note the use of the conditional tense - mark a turning point: firstly, because the mercurial American president seems ready to do anything to outdo the Chinese; secondly, because MP has just begun the production of neodymium magnets at its Independence site in Texas, in addition to its rare earth oxide production activities at Mountain Pass in California.
However, as things stand, the bulk of neodymium magnet production is reserved for General Motors, while the vast majority of rare earth oxide production is sold... to the Chinese group Shenghe Resources, which then brings it back to China for local refining. Incidentally, Shenghe controls 8.4% of MP's capital.
The fairytale of industrial sovereignty is now a thing of the past. All the more so since, as we have pointed out on several occasions in these columns, the subject of rare earths is neither their scarcity - despite their qualification, they are in fact abundant - nor their cost of extraction, but rather their extraordinarily costly and polluting refining: there is still a long way to go, new money to be found and resistance to be overcome to repatriate these heavy industry chemical activities to the US.
In light of current events, and unsurprisingly, all this is not stopping CEO James Litinsky from making the rounds of TV shows to extol the merits of his group. However, Litinsky does not seem to be putting his money where his mouth is, as he has been a relentless seller of his own shares for the past few months.
In this context, MarketScreener is astonished that MP has chosen to buy back 8.6% of its outstanding shares in 2024, i.e. around fifteen million shares; this would indeed offer an unexpected outlet for the two most active sellers on the market at the moment, namely James Litinsky himself and the hedge fund QVT. It's worth pointing out that MP Materials COO Michael Rosenthal is a QVT alumnus. Another thing you can't make up...
