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USA Rare Earth (USAR) Stock Gains 8% as Company Announces $3.1 Billion in Combined Financing Deals
TLDR
- USA Rare Earth shares jumped 7.9% to $26.72 on Monday with volume spiking 439% to 121.6 million shares after major financing news
- The company landed a non-binding $1.6 billion government package through CHIPS Program plus a $1.5 billion private placement deal
- Federal funding includes $277 million in grants and a $1.3 billion loan, with the U.S. government taking 16.1 million shares and 17.6 million warrants
- Combined $3.1 billion in capital aims to fund the Round Top mine in Texas and accelerate production timeline to 2028
- Six analysts rate the stock a buy with a $24.67 consensus price target, though the company remains unprofitable
USA Rare Earth posted gains of 7.9% on Monday after announcing a government financing package. Shares closed at $26.72 following an intraday peak of $32.07.
Volume exploded to 121.6 million shares traded. That’s a 439% jump from the 22.6 million share daily average.
The company secured a non-binding letter of intent for $1.6 billion from the U.S. government. The package comes through the CHIPS Program and includes $277 million in federal funding plus a $1.3 billion senior secured loan.
USA Rare Earth also closed a separate $1.5 billion private placement. The deal prices shares at $21.50 and is expected to close January 28, 2026.
Combined, the two agreements deliver roughly $3.1 billion in capital. The money will fund the company’s mine-to-magnet operations at Round Top in Texas.
Government Takes Equity Position
The Commerce Department will receive 16.1 million common shares and 17.6 million warrants as part of the CHIPS agreement. This gives the federal government a potential 8-16% ownership stake on a fully diluted basis.
The letter of intent remains non-binding. Final terms require approvals and definitive documentation.
USA Rare Earth currently has 148 million shares outstanding. The market cap stands at $3.7 billion.
Funding will be released in phases tied to specific milestones. These include development progress at Round Top, processing facilities, and expanded magnet manufacturing.
The company still needs to secure an estimated $4.1 billion in additional capital expenditures. A $250 million revolving credit facility is also required.
Challenging China’s Market Control
The Trump administration has made domestic rare earth production a priority. China controls roughly 85% of global rare earth processing capacity.
These minerals are critical for smartphones, electric vehicles, and military equipment like F-35 fighter jets. China has previously leveraged its market position in geopolitical negotiations.
USA Rare Earth plans to extract 40,000 tons of ore daily by 2030. The company targets annual production of 10,000 tons of rare earth magnets.
Analyst estimates put current U.S. demand at about 50,000 tons of rare earth magnets per year. Demand continues growing.
The Round Top deposit sits in Hudspeth County, Texas. USA Rare Earth also operates a magnet plant in Stillwater, Oklahoma.
Analyst Views and Market Position
Six analysts rate USA Rare Earth as a buy, with one sell rating. The consensus price target is $24.67.
Roth Mkm maintains a buy rating with a $35 price target. Benchmark initiated coverage with a buy rating on January 21.
The stock’s 50-day moving average is $15.71. The 200-day moving average sits at $17.13.
USA Rare Earth reported a $0.25 per share loss in its latest quarter. That missed analyst estimates by $0.19.
The Stillwater magnet plant continues commissioning with Line 1a underway. Commercial production at Round Top is targeted for 2028.
The private placement involves issuing 69.8 million shares to institutional investors. Proceeds support general corporate purposes and the mine-to-magnet buildout.
