USA Rare Earth Surges 35.6% in 3 Months: Should You Buy the Stock Now?

Core Insights - USA Rare Earth, Inc. (USAR) shares have increased by 35.6% over the past three months, underperforming the industry but outperforming the S&P 500, which returned 3% during the same period [1][2]. Company Performance - The stock closed at $19.40, below its 52-week high of $43.98 and above its 52-week low of $5.56, indicating solid upward momentum as it trades above both its 50-day and 200-day moving averages [4][5]. - USAR's shares rose due to progress at the Stillwater magnet plant, which is nearing commercial production, and the company secured $1.5 billion in PIPE financing to expand NdFeB capacity to approximately 1,200 metric tons [7][9]. Operational Developments - The Stillwater facility is designed to produce Neodymium Iron Boron (NdFeB) magnets, crucial for various high-growth applications, and is expected to be one of the first large-scale magnet plants in the U.S. [9]. - The company is currently installing key equipment and preparing for commissioning in early 2026, with efforts to hire and train engineers and technicians to operate the facility [10]. Financial Position - USAR's balance sheet has been strengthened through PIPE financing and warrant exercises, resulting in a cash position exceeding $400 million as of November 2025 [11]. - The company completed the acquisition of Less Common Metals in November 2025, which will supply critical metal and alloy feedstock for the Stillwater plant [12]. Financial Performance - Despite the progress, USAR reported a Q3 loss due to rising selling, general and administrative (SG&A) and research and development (R&D) costs, remaining pre-revenue [7][13]. - SG&A expenses increased to $11.4 million from $0.8 million year-over-year, while R&D expenses rose to $4.45 million from $1.16 million [13][14]. Valuation Metrics - USAR is trading at a forward price-to-earnings ratio of negative 67.43X, compared to the industry average of 16.05X, with peers NioCorp and BHP Group at negative 10.71X and 15.6X, respectively [18]. Future Outlook - The ongoing development at the Stillwater facility suggests progress towards commercial production, but high operating and development costs, along with the lack of current revenues, may impact near-term performance [19].