Shares of USA Rare Earth, Inc. (NASDAQ: USAR) closed down 1.52% at $20.08 on Feb. 25, 2026, capping a week of choppy trading for the critical minerals company as Wall Street reassesses its valuation following a sharp pullback from 2025 highs and amid surging demand for domestic rare earth supplies.

USA Rare Earth
USA Rare Earth

The stock has tumbled more than 24% over the past month and remains well below its all-time high of $43.98 reached in October 2025, reflecting broader market caution toward pre-revenue miners and processors in the rare earth sector. Year-to-date, however, USAR has delivered strong gains of approximately 63%, buoyed by landmark federal support announced in late January.

USA Rare Earth, headquartered in Stillwater, Oklahoma, is positioning itself as a key player in building a fully domestic supply chain for rare earth elements and permanent magnets essential for electric vehicles, wind turbines, defense systems and advanced electronics. The company operates mining rights at the Round Top deposit in West Texas — one of the richest known sources of heavy rare earths including dysprosium and terbium — and is constructing a sintered neodymium-iron-boron (NdFeB) magnet manufacturing facility in Stillwater.

The most significant catalyst came on Jan. 26, 2026, when USA Rare Earth announced a letter of intent with the U.S. Department of Commerce under the CHIPS and Science Act. The deal includes proposed $277 million in direct federal funding and a $1.3 billion senior secured loan, totaling up to $1.6 billion in government backing. In exchange, the federal government acquired a roughly 10% equity stake through the purchase of shares and warrants.

Concurrently, the company closed a $1.5 billion private investment in public equity (PIPE) financing on Jan. 29, bringing total new capital to more than $3 billion when combined with the federal package. Management described the transactions as enabling the acceleration of heavy rare earth and magnet production, with ambitious targets to achieve the largest domestic capacity by 2030.

"The government stake provides a powerful backstop and derisks execution," said one analyst familiar with the sector. "It signals strong policy alignment under the current administration to reduce reliance on Chinese-dominated supply chains."

Rare earths remain a geopolitical flashpoint. China controls about 90% of global processing and has imposed export restrictions on certain elements, exacerbating shortages in U.S. aerospace and semiconductor industries. Recent reports indicate worsening yttrium and scandium shortages, with prices for some oxides surging dramatically and suppliers rationing material to key clients.

USA Rare Earth aims to capitalize on this dynamic. Its Stillwater magnet plant is in the commissioning phase, with first commercial production targeted for the first half of 2026. Initial output will rely on externally sourced rare earth metals, but by 2028, the company expects to integrate feed from Round Top, creating a fully integrated "mine-to-magnet" chain.

Long-term projections are aggressive: Management forecasts annual revenues approaching $2.6 billion and EBITDA of $1.2 billion by 2030, driven by planned capacity exceeding 10,000 metric tons of rare earth magnets per year. U.S. demand for such magnets currently stands at around 50,000 tons annually and is projected to double by 2035 amid electrification trends.

Despite the optimism, challenges persist. The company reported no operating revenue as of late 2025, with cash burn tied to development. Analysts note execution risks, including construction delays, regulatory hurdles at Round Top and competition from peers like MP Materials (NYSE: MP), which has already restarted domestic mining.

Trading volume has been elevated, averaging nearly 18 million shares daily, with recent sessions seeing swings tied to broader commodity sentiment and policy news. On Feb. 25, shares traded in a range of $19.76 to $20.75 on volume of about 10.8 million shares, below the average but still active.

Investor sentiment remains mixed. Some point to the federal involvement as transformative, akin to a "new era of industrial policy," while others caution about valuation gaps. At a market cap of roughly $4.4 billion, the stock trades at a significant premium to book value with no current earnings, leading to negative price-to-earnings multiples.

Recent analyst commentary has focused on reassessing fair value after the swings. One report highlighted a 61.5% three-month gain earlier in the year contrasted with the recent monthly decline, suggesting the market is digesting both upside from funding and downside from delayed commercialization.

Broader sector trends support long-term tailwinds. Rare earth oxide prices have climbed outside China, potentially reducing the need for heavy government price supports. USA Rare Earth has also advanced partnerships, including the selection of Fluor Corp. and WSP Global as EPCM partners for feasibility studies and an expansion into Europe via subsidiary Less Common Metals.

As commissioning progresses at Stillwater, the coming months will be pivotal. Successful startup could validate the government's bet and drive further momentum in the shares. Failure to meet timelines, however, risks renewed pressure.

Investors continue to monitor geopolitical developments, including upcoming U.S.-China summits that could influence export policies and critical mineral strategies.

USA Rare Earth did not immediately respond to requests for comment on current trading or outlook.