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MP Materials' Cash Flow Under Pressure: A Turnaround on the Horizon?
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Key Takeaways
MP Materials posted a negative $66.8M in operating cash flow in the first half of 2025.
Weak prices, high costs and inventory buildup have weighed on MP's cash generation.
A DoD price floor deal and rising NdPr volumes may help stabilize MP's future cash flow.
MP Materials Corp. (MP - Free Report) reported negative operating cash flow from operations of $66.8 million in the first half of 2025 against an outflow of $10.3 million in the same period last year. The sharp decline was due to the recognition of deferred revenues from magnetic precursor product sales and the buildup of inventories to support the ramp-up in production of separated products and magnetic precursor products. Free cash flow stood at a negative $114 million in the first half of 2025. This weak performance follows a two-year stint of lower operating cash flow and negative free cash flow for MP Materials.
The last significant improvement in MP’s cash flow occurred in 2022, when it generated $343.5 million in operating cash and $22 million in positive free cash flow, benefiting from robust product sales and record-high rare earth prices amid strong global demand.
However, since then, MP’s cash flow performance has closely tracked the downturn in rare earth prices, as demand for magnetic products fell short of expectations.
In 2023, cash flow from operations plunged 82% year over year to $62.7 million on lower prices as well increase in inventories to support its Stage II separations facilities as well as Stage III initiatives. Operating cash flow dropped a further 79% to $13.3 million in 2024 on lower prices and an increase in inventories as the company ramped up production of separated products.
Notably, free cash flow was negative $196 million and $173 million in 2023 and 2024, respectively.
MP Materials is seeing higher production costs as producing separated products is more costly than producing rare earth concentrates. Selling, general and administrative expenses have also flared up as it expanded its workforce to support the downstream expansion. These factors have driven up operating expenses, keeping margins and cash flows under pressure in the near term.
On the positive side, NdPr production volumes are increasing as process optimization and ramp-up efforts progress. Higher output and potentially stronger NdPr prices are expected to bolster revenues in upcoming quarters. The recent U.S. Department of Defense (DoD) 10-year agreement, which sets a price floor of $110 per kilogram for MP’s NdPr products, provides additional stability and mitigates exposure to market volatility.
MP Materials' decision to halt its rare earth shipments to China led to a rebound in rare earth elements prices. With global demand expected to rise and prices strengthening, MP could see some relief in cash flow performance after two challenging years.
MP Materials’ shares have skyrocketed 372.9% so far this year compared with the industry’s 29.9% growth.
Image Source: Zacks Investment Research
Energy Fuels (UUUU - Free Report) is a major producer of uranium in the United States and owns the White Mesa Mill, the only operating conventional uranium mill in the country. After making enhancements, the mill began producing separated NdPr in 2024 and plans to start producing "heavy" rare earth oxide by the fourth quarter of 2026. Energy Fuels shares have gained 243% so far this year.
Lynas Rare Earths Limited (LYSDY - Free Report) is engaged in the exploration, development, mining, extraction and processing of rare earth minerals in Australia and Malaysia. Lynas shares have gained 219.5% year to date.
MP is trading at a forward 12-month price/sales multiple of 25.13X, a significant premium to the industry’s 1.46X. Energy Fuels is trading at a price/sales multiple of 37.83X while Lynas is trading at 18.39X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MP Materials’ 2025 earnings is pegged at a loss of 28 cents per share, narrower than the loss of 44 cents in 2024. The bottom-line estimate for 2026 is pegged at earnings of 91 cents per share, indicating a solid improvement.
While the estimates for 2025 have moved up in the past 60 days, the same for 2026 has been revised downward, as shown in the chart below.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold).
Image: Shutterstock
MP Materials' Cash Flow Under Pressure: A Turnaround on the Horizon?
Key Takeaways
MP Materials Corp. (MP - Free Report) reported negative operating cash flow from operations of $66.8 million in the first half of 2025 against an outflow of $10.3 million in the same period last year. The sharp decline was due to the recognition of deferred revenues from magnetic precursor product sales and the buildup of inventories to support the ramp-up in production of separated products and magnetic precursor products. Free cash flow stood at a negative $114 million in the first half of 2025. This weak performance follows a two-year stint of lower operating cash flow and negative free cash flow for MP Materials.
The last significant improvement in MP’s cash flow occurred in 2022, when it generated $343.5 million in operating cash and $22 million in positive free cash flow, benefiting from robust product sales and record-high rare earth prices amid strong global demand.
However, since then, MP’s cash flow performance has closely tracked the downturn in rare earth prices, as demand for magnetic products fell short of expectations.
In 2023, cash flow from operations plunged 82% year over year to $62.7 million on lower prices as well increase in inventories to support its Stage II separations facilities as well as Stage III initiatives. Operating cash flow dropped a further 79% to $13.3 million in 2024 on lower prices and an increase in inventories as the company ramped up production of separated products.
Notably, free cash flow was negative $196 million and $173 million in 2023 and 2024, respectively.
MP Materials is seeing higher production costs as producing separated products is more costly than producing rare earth concentrates. Selling, general and administrative expenses have also flared up as it expanded its workforce to support the downstream expansion. These factors have driven up operating expenses, keeping margins and cash flows under pressure in the near term.
On the positive side, NdPr production volumes are increasing as process optimization and ramp-up efforts progress. Higher output and potentially stronger NdPr prices are expected to bolster revenues in upcoming quarters. The recent U.S. Department of Defense (DoD) 10-year agreement, which sets a price floor of $110 per kilogram for MP’s NdPr products, provides additional stability and mitigates exposure to market volatility.
MP Materials' decision to halt its rare earth shipments to China led to a rebound in rare earth elements prices. With global demand expected to rise and prices strengthening, MP could see some relief in cash flow performance after two challenging years.
MP & Peers’ Price Performance, Valuation & Estimates
MP Materials’ shares have skyrocketed 372.9% so far this year compared with the industry’s 29.9% growth.
Energy Fuels (UUUU - Free Report) is a major producer of uranium in the United States and owns the White Mesa Mill, the only operating conventional uranium mill in the country. After making enhancements, the mill began producing separated NdPr in 2024 and plans to start producing "heavy" rare earth oxide by the fourth quarter of 2026. Energy Fuels shares have gained 243% so far this year.
Lynas Rare Earths Limited (LYSDY - Free Report) is engaged in the exploration, development, mining, extraction and processing of rare earth minerals in Australia and Malaysia. Lynas shares have gained 219.5% year to date.
MP is trading at a forward 12-month price/sales multiple of 25.13X, a significant premium to the industry’s 1.46X. Energy Fuels is trading at a price/sales multiple of 37.83X while Lynas is trading at 18.39X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MP Materials’ 2025 earnings is pegged at a loss of 28 cents per share, narrower than the loss of 44 cents in 2024. The bottom-line estimate for 2026 is pegged at earnings of 91 cents per share, indicating a solid improvement.
While the estimates for 2025 have moved up in the past 60 days, the same for 2026 has been revised downward, as shown in the chart below.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.