USA Rare Earth stock jumps as DOE funding fuels growth optimism

Shares of USA Rare Earth USAR moved 8% higher on Thursday after the company was selected for potential funding from the US Department of Energy under its “Critical Materials Innovation, Efficiency and Alternatives” program, adding fresh momentum to a stock already benefiting from renewed interest in domestic rare earth supply chains.

The funding package, which could total up to $19.3 million pending final negotiations, is intended to support the development of a pilot-scale rare earth element separations project aimed at strengthening US processing capacity for materials critical to energy, technology, and defense applications.

The announcement came as rare earth stocks broadly rebounded following a recent selloff tied to speculation that China could loosen export restrictions on certain critical minerals.

USA Rare Earth shares rose after already rallying more than 13% on Wednesday. The company’s stock has gained nearly 160% over the past 12 months.

DOE funding strengthens domestic supply chain push

The Department of Energy initiative highlights ongoing efforts by the US government to reduce dependence on China for strategically important rare earth materials.

USA Rare Earth said the funding would help advance pilot-scale rare earth separation capabilities within the United States, an area viewed as increasingly important for national security and industrial policy.

The company previously announced in January that the Commerce Department planned to provide up to $1.6 billion (approx. €1.4 billion) in support, including $277 million (approx. €241.6 million) in cash and a $1.3 billion (approx. €1.1 billion) loan.

According to the company, that transaction is expected to be finalized this month.

Rare earth materials remain essential to a wide range of industries, including defense systems, electric vehicles, semiconductors, and energy infrastructure.

Recent geopolitical tensions have intensified attention on the sector after China imposed export restrictions on several critical minerals used in military and industrial applications.

According to William Blair analyst Neal Dingmann, pricing for some rare earth materials outside China has risen roughly 400% compared with domestic Chinese prices because of the restrictions.

China’s Ministry of Commerce recently said it would work to resolve “legitimate and lawful concerns” regarding rare earth exports while maintaining export controls for military-related uses.

Earnings beat expectations

USA Rare Earth also reported quarterly results that exceeded analyst expectations.

The company posted a first-quarter adjusted loss of 12 cents per share, narrower than Wall Street estimates for a 14-cent loss.

Revenue totaled $5.7 million (approx. €5 million) during the quarter, surpassing analyst expectations of approximately $4.2 million (approx. €3.7 million).

The company engages in the mining, processing, and supply of rare earth elements, which are increasingly viewed as critical materials in global manufacturing and defense supply chains.

Investor sentiment toward the sector has improved in recent weeks amid growing concerns about long-term supply shortages and rising demand tied to defense production and clean energy technologies.

Technical momentum remains strong

USA Rare Earth has continued to show strong technical momentum despite recent volatility across the broader rare earth sector.

The stock is currently trading slightly below its 20-day simple moving average of $24.54 but remains well above its 50-day moving average.

The company’s Relative Strength Index stood at 48.24, indicating neutral momentum conditions without signaling either overbought or oversold territory.

Analyst sentiment also remains positive.

Wedbush maintained an Outperform rating with a $35 price target earlier this month, while Cantor Fitzgerald reiterated an Overweight rating and also raised its target to $35.

The stock currently carries an average analyst price target of $34.25 and a broader Buy consensus among analysts.