USA Rare Earth Stock Soars 15% — Is Now the Right Time to Buy?

USA Rare Earth Skyrocketed Today, Is the Stock a Buy?

In the fast-paced world of stock trading, few things grab attention like a sudden spike in share prices. Today, October 10, 2025, USA Rare Earth (NASDAQ: USAR) did just that, skyrocketing by over 15% in a single trading session and hitting new all-time highs.

Investors are buzzing about this domestic player in the critical minerals sector, especially amid escalating geopolitical tensions. But is this surge a signal to buy, or just a fleeting hype? Let's dive into the details, from the immediate catalysts to the long-term prospects, to help you decide if USAR deserves a spot in your portfolio.Rare earth elements (REEs) are essential for everything from electric vehicles and wind turbines to smartphones and military hardware. With China dominating global supply controlling about 60-70% of production the U.S. has been pushing for domestic alternatives to reduce dependency.

 USA Rare Earth is positioning itself as a key part of that solution, making today's rally particularly timely.The Catalyst: China's Export Restrictions Spark a RallyThe big news driving today's jump? China announced tighter controls on rare earth exports, specifically imposing a default ban on shipments to the defense sector. This move, effective immediately, escalates ongoing trade frictions between the U.S. and China, where rare earths have long been a point of leverage. Beijing's decision comes amid broader restrictions on critical minerals, fueling fears of supply shortages for U.S. industries reliant on these materials. As a result, shares of non-Chinese rare earth producers surged across the board. USA Rare Earth led the pack, climbing as high as 18% intraday before settling around 15% up by close.Competitors like MP Materials also saw gains, but USAR's performance stood out, pushing its market cap toward $2 billion. This isn't the first time geopolitical events have boosted the stock similar spikes occurred in recent weeks amid reports of U.S. government interest in staking domestic miners.  Analysts point out that while China's curbs are targeted at defense, they could ripple into commercial sectors, increasing demands For investors, this highlights the volatility in the sector: good news for domestic players like USAR, but also a reminder of how external factors can swing prices wildly.USA Rare Earth: A Closer Look at the CompanyFounded with the goal of building a fully integrated, U.S.-based rare earth supply chain, USA Rare Earth is more than just a miner it's aiming to be a one-stop shop for extraction, processing, and magnet production.

 The company operates the Round Top project in Sierra Blanca, Texas, a massive deposit rich in heavy rare earths like neodymium and praseodymium, which are crucial for high-performance magnets used in EVs and renewable energy Beyond mining, USAR has expanded into downstream operations. In a recent $100 million acquisition, it snapped up UK-based Less Common Metals, bolstering its magnet manufacturing capabilities.

 It's also developing a processing facility in Stillwater, Oklahoma, with plans to produce magnets domestically a move that aligns perfectly with U.S. policies like the Inflation Reduction Act, which incentivizes local sourcing. The company's leadership has been vocal about its strategic importance. CEO recently confirmed ongoing talks with the White House, including direct communication with the Trump administration, about potential government support or mergers.

The U.S. Department of Defense has already invested in similar projects to secure supply chains for national security.

Financially, USAR is still in growth mode. It's not yet profitable, with revenues primarily from development-stage activities, but analysts project breakeven in the next 2-3 years as production ramps up. The stock has been on a tear, up 94% in the past five weeks alone, reflecting investor optimism about its role in America's push for mineral independence 

Analyzing the Stock: Valuation and RisksAt today's closing price of around $31.07, USAR trades at a premium compared to peers.  Its price-to-sales ratio is elevated, sitting above 20x forward estimates, which some analysts argue overvalues the company given its pre-profit status. Market cap hovers around $1.6-2 billion, a hefty sum for a firm years away from full-scale production. On the flip side, the growth potential is immense. Global REE demand is expected to double by 2030, driven by the green energy transition.  If USAR successfully executes its mine-to-magnet strategy, it could capture a significant share of the U.S. market, potentially generating hundreds of millions in annual revenue. Government subsidies or contracts could accelerate this, reducing execution risks.However, challenges abound. Mining projects like Round Top face environmental hurdles, regulatory delays, and high capital costs USAR may need additional funding, diluting shareholders. Commodity prices for REEs are volatile, and if China eases restrictions, the stock could plummet. Ownership structure also raises eyebrows, with potential conflicts noted in deep-dive analyses.

Pros and Cons of Investing in USARTo make it clearer, here's a balanced look at the investment case:

Strategic Positioning: As one of the few U.S.-based REE players, USAR benefits from national security priorities and potential government backing.  Integrated Supply Chain: From mine to magnets, this vertical integration could lead to higher margins once operational.

Market Tailwinds: Rising demand for EVs, renewables, and defense tech supports long-term growth. Recent Momentum: Acquisitions and White House talks signal progress.

Cons:High Valuation: At current prices, much of the upside is already baked in, leaving room for disappointment if milestones slip.

Operational Risks: Delays in mining or processing could burn cash and erode confidence.

Geopolitical Volatility: The stock's fate is tied to U.S.-China relations easing tensions might reverse gains and also Lack of Profits Investors must be patient, as profitability is years away.

Source: cnbc