MP Materials plunges 3.8% on Texas magnet plant announcement
$1.25 billion facility targets China's rare earth dominance despite mixed market reaction
MP Materials shares fell 3.8% to $51.70 on Friday after the rare earth miner announced plans to invest $1.25 billion in a new manufacturing campus in Northlake, Texas, despite the project receiving backing from the U.S. Department of Defense and state incentives totaling $200 million.
The facility, dubbed "10X," is scheduled to begin commissioning in 2028 and will produce approximately 10,000 metric tons of neodymium-iron-boron (NdFeB) magnets annually—critical components for electric vehicles, robotics, and drones. The company expects the campus to create 1,500 manufacturing and engineering jobs, according to the official company announcement.
The market's lukewarm response contrasts sharply with the strategic importance analysts ascribe to the project, particularly as the U.S. seeks to reduce dependence on China for critical minerals. China controlled 69.2% of global rare earth output in 2025 and processes nearly 90% of the world's rare earths, maintaining overwhelming dominance in the supply chain for technologies essential to both civilian and defense applications.
The Texas project includes a landmark public-private partnership with the Department of Defense, which has committed to purchasing all NdFeB magnets produced by the factory that are not acquired by commercial clients during the first 10 years of operation. General Motors, which has a long-term supply agreement with MP Materials dating back to 2021, represents one such commercial customer.
"The partnership between MP Materials and the DoD is a critical step toward accelerating U.S. rare earth magnet independence," noted Manufacturing Dive, highlighting the facility's role in bolstering domestic manufacturing capabilities.
At $1.25 billion, the investment represents roughly 13% of MP Materials' current $9.5 billion market capitalization—a significant bet on vertical integration from a company that has yet to achieve consistent profitability. The company reported diluted earnings per share of negative $0.50 over the trailing 12 months, with $275.5 million in revenue and a negative profit margin of 31.2%.
Investors may also be reacting to MP Materials' recent earnings miss in the fourth quarter of 2025, when revenue declined 13.6% year-over-year to $52.69 million, falling short of analyst expectations of $76.06 million. While earnings per share of $0.09 beat estimates, the revenue shortfall raised questions about near-term execution.
Despite Friday's decline, Wall Street maintains a broadly bullish outlook on the stock. Analysts have set a consensus target price of $78.50, representing 52% upside from current levels. Of 15 analysts covering the stock, 3 rate it a Strong Buy and 12 rate it a Buy, with zero Hold or Sell ratings.
The Texas incentives include a $12.88 million grant from the Texas Enterprise Fund for corporate operations and a $53.46 million grant from the Texas Semiconductor Innovation Fund specifically for the manufacturing facility, according to Governor Greg Abbott's office. The state and local incentive package totals approximately $200 million over more than a decade.
The competitive pressure from China remains formidable. Chinese exports of rare earth magnets increased 8.2% year-over-year in the first two months of 2026, reaching 10,763 metric tonnes, demonstrating continued expansion even as the U.S. builds domestic alternatives.
MP Materials, which operates the only rare earth mine and processing facility in the United States at Mountain Pass, California, received investments from both Apple and the Defense Department in the past year. The DoD also provided a $150 million loan from its Office of Strategic Capital to support heavy rare-earth separation capabilities at the existing California facility.
With the stock trading well below its 52-week high of $100.25 and down approximately 15% from its 50-day moving average of $61.09, some investors may view Friday's decline as an opportunity to buy into a company attempting to solve a critical national security challenge. The 10X facility represents the company's most ambitious step yet toward transforming from a pure-play miner into a vertically integrated rare earth magnet manufacturer.
However, the execution risks remain significant. The facility will not begin commissioning until 2028, giving competitors—including Chinese firms with existing scale and lower costs—time to further entrench their market positions. For investors, the key question is whether MP Materials can translate its government-backed strategic positioning into sustainable profitability before the capital-intensive investment begins weighing on the balance sheet.