Key Points
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MP Materials signed a significant long-term supply agreement with an unnamed U.S. aerospace and defense customer.
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The deal provides several benefits for the rare-earth company.
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It’s a continued validation of its growth strategy.
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MP Materials (NYSE: MP) recently announced it had signed a supply agreement with a new, unnamed customer. That news, along with its second-quarter earnings report, has proven to be quite the catalyst for the rare-earth stock, which has rallied more than 10% since the announcement.
While MP Materials has publicly named many other noteworthy new customers (e.g., Apple and the Department of Defense), it’s keeping this one secret for now. All it revealed is that it’s a significant long-term offtake agreement with a U.S. aerospace and defense customer for separated gadolinium, one of the 17 rare-earth metals. The customer’s name isn’t what’s significant here. Let’s break down why the deal itself matters for MP Materials stock.
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Layering in another growth driver
MP Materials currently makes most of its revenue from NdPr oxide and metal (a fused blend of neodymium and praseodymium, two rare-earth elements). It’s an important material for electric vehicles, robotics, and electronics. During the second quarter, MP Materials generated $94.4 million in revenue from NdPr oxide and metal sales, accounting for 87% of its total revenue.
With that context, let’s turn to the deal. The company noted that the contract with the unnamed U.S. aerospace and defense customer is “significant” and “at attractive economics.” This suggests it should be a meaningful future contributor to revenue. It’s also for separated gadolinium, which will expand its HREE (heavy rare-earth elements) product portfolio, providing additional diversification. The deal also expands its customer base. That’s a lot of benefits in one contract.
It builds on its previously disclosed large-scale deals with Apple and the DoD. In July 2025, Apple signed a $500 million partnership with MP Materials for the production of recycled rare-earth magnets in the U.S., helping the tech titan source 100% of the recycled rare-earth magnets for its products domestically. It also signed a transformative public-private partnership with the DoD last July to accelerate U.S. independence for rare-earth magnets by constructing its new 10X facility in Texas.
These and other deals are enabling MP Materials to build a large-scale, diversified rare-earth business. They position the company for continued growth in the coming years as it commences its Apple supply agreement (2027), completes 10X (2028), and starts other customer agreements. “As we expand our commercial relationships, scale domestic manufacturing capacity, and deepen our vertical integration, we are strengthening MP’s competitive position and building a differentiated industrial platform that we believe will drive long-term shareholder value,” commented founder and CEO James Litinsky in the second-quarter earnings press release.
While the promise is growing more apparent, risks remain and bear watching
The unnamed U.S. aerospace and defense customer deal is just one of the many storylines running through MP Materials these days. The company’s revenue jumped 89% in the second quarter, driven by strong NdPr sales. Despite that, it’s still losing money (nearly $2.1 million in the quarter, though that’s down 90% year over year). Meanwhile, the mining stock has been volatile, falling over 25% in the past year despite the recent rally (and 45% from its 52-week high).
That volatility will likely continue as investors weigh the company’s future potential against its risks. Its long-term potential is becoming more evident with each new deal. However, just as important to monitor is its ability to execute its strategy by converting these signed agreements into revenue.
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Matt DiLallo has positions in Apple and has the following options: short September 2026 $300 calls on Apple. The Motley Fool has positions in and recommends Apple and MP Materials. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
