USA Rare Earth Stock is Soaring in 2026, Is it Still a Buy?

Core Viewpoint - USA Rare Earth has seen a significant stock increase of 83% year to date, attributed to a collaboration agreement with the U.S. Government, which was anticipated following a similar deal by MP Materials [1] Group 1: Growth Plans - The collaboration agreement announced in late January has both advantages and disadvantages for investors, including dilution of existing shareholders' interests due to the issuance of shares and warrants [2] - The company raised $3.1 billion in funding, which includes $1.3 billion from a senior secured loan, $277 million from equity sales to the government, and $1.6 billion from private equity investments, thereby reducing business risks and enhancing operational expectations [2] Group 2: Production Plans - USA Rare Earth plans to commence commercial production of rare earth magnets at its Stillwater, Oklahoma facility this year, with plans to start production at the Round Top mining deposit in Texas by 2028 [3] - The influx of funds allows the company to finance its mining, processing, and magnet production goals, significantly altering operational expectations for 2030 [4] Group 3: Capacity and Financial Projections - The agreement has led to increased production capacity projections for 2030: metal making capacity is expected to rise from 2,000 tonnes per annum (tpa) to 27,500 tpa, and magnet making capacity from 4,800 tpa to 10,000 tpa [6] - Financial projections for 2030 include anticipated revenue of $2.6 billion, EBITDA of $1.2 billion, and free cash flow of $900 million [7]