October 2025 was arguably the best month for U.S. rare-earth stocks. Indeed, both of the top two rare-earth miners in the U.S. — MP Materials(NYSE: MP) and USA Rare Earth(NASDAQ: USAR) — were on an absolute tear, with both stocks up over 45% from the start of the month to Oct. 14, 2025. The geopolitical climate looked favorable to rare-earth companies, China was tightening its grip on critical minerals, and the White House appared dead-set on building a domestic rare-earth supply chain.
What could go wrong, right?
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Fast-forward to today, and rare-earth stocks have not delivered on the sky-high expectations investors have had for them. Both MP Materials and USA Rare Earth are down year over year as I write this, as is the VanEck Rare Earth and Strategic Metals ETF(NYSEMKT: REMX).
Although all three are in the red, USA Rare Earth has taken the biggest hit. In fact, an investment in USA Rare Earth last October would have been cut in half.
Image source: Getty Images.
A $10,000 investment in USA Rare Earth would be worth this much today
On Oct. 6, 2025, the closing price for USA Rare Earth was about $26. Today, one year later, USA Rare Earth is trading for about $14 a share as I write this. Put differently, a $10,000 in USA Rare Earth stock would be worth about $5,300 today, a loss of roughly 47%.
What happened? Well, USA Rare Earth was riding a wave of investor enthusiasm last October. The Department of Defense had recently invested $400 million in MP Materials, and China was tightening restrictions around rare-earth exports. True, the former bit helped its rival more than itself, but news of Washington’s broad support of the rare-earth industry lifted both companies on Wall Street.
At the same time, USA Rare Earth had just appointed Barbara Humpton, former CEO of Siemens USA, as its new CEO last September. Humpton revealed that the company was in talks with the White House, which fueled speculation that USA Rare Earth would receive federal support next.
Things were looking good. Then, things started going south.
In late October, the U.S. and China reached a trade truce that paused China’s newest rare-earth export restrictions. All of a sudden, much of the urgency that had shaped USA Rare Earth’s bull case had lost its tension.
Meanwhile, investors were waking up to just how much USA Rare Earth would need to turn its mine-to-magnet ambitions into a thriving business. Indeed, this was especially clear in January 2026, when USA Rare Earth raised $1.5 billion by selling around 70 million new shares.
Is USA Rare Earth worth a large investment today?
I wouldn’t put a big investment into USA Rare Earth today. Mining is an expensive business, and even with federal support in its back pocket, USA Rare Earth has a long way to go before it will produce rare-earth magnets. In the meantime, plenty of factors could derail its ambitions or limit its growth, not the least of which is the enormous amount of capital required to build mines and magnet factories.
At this point, most investors would probably be better off with a rare-earth exchange-traded fund (ETF) that holds shares of multiple companies rather than investing directly in USA Rare Earth.
Should you buy stock in USA Rare Earth right now?
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Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MP Materials. The Motley Fool has a disclosure policy.
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