Buy This, Not That: Revenue vs. Empty Promises in the Rare Earth Rush

Shah Gilani|October 15, 2025

The U.S. government just placed two massive bets on American rare earth miners.

Both stocks gapped higher on the news. Both have billion-dollar government backing. Both claim they’re essential to breaking China’s rare earth monopoly.

But here’s where the similarities end…

One miner has an operational facility pulling rare earths out of the ground right now – with $242 million in trailing revenue and government contracts guaranteeing purchase prices.

The other? Zero revenue. Zero production. Just a $2.26 billion loan and a joint venture that hasn’t extracted anything yet.

In today’s Buy This, Not That, I reveal which government-backed miner deserves your attention – and which one is riding pure speculation with execution risk at every turn.

Click on the thumbnail to see which is which.

TRANSCRIPT

Hey everybody, Shah Gilani here with your weekly BTNT, as in Buy This, Not That, and what’s hot these days is what I’m going to talk about today.

The government – the U.S. government, parts of the government, whether it’s the Department of Energy or the Department of Defense – is investing in U.S. companies. There’s maybe an Australian company that the U.S. might put some money into. Why? Because the U.S. is looking for security in precious metals, rare earths, and materials that matter to the future: batteries, electricity generation, AI magnets, you name it.

We’re having a bit of a dust-up with China over rare earths. So the United States is putting money into U.S. companies. For the most part, that doesn’t mean they won’t go farther afield. Two names that have come up that I’ve been getting questions about are MP Materials and Lithium Americas. Today, I’m going to pit MP Materials against Lithium Americas.

Both have had stellar action. I’ll start with MP Materials. Here’s the one-year chart of MP Materials, which is up more than 450% from this dead zone here, which was moving along doing absolutely nothing. Then the government showed interest.

Back in July, the U.S. government made a $400 million investment through the Department of Defense, basically handing MP Materials money and saying, “We want a piece of your action here.”

They got Series A preferred shares for their $400 million investment and some warrants. So theoretically, the U.S. can own a chunk of MP Materials and probably would like to buy more if the company does well. What they want to do is secure some of the rare earths that MP Materials mines that go toward magnets, which is what the Department of Defense really wants. But the government wants that in general too.

MP Materials is the U.S. answer for pushing back against China’s rare earth export controls. That’s the reason for the U.S. government’s investment in MP Materials. In addition to the $400 million preferred, MP Materials got a $150 million loan. Everybody sees this and says, “Wow.”

Here’s this stock doing nothing in May and June. Then you get rumors and boom – not so much. Then, oh yeah, there’s truth to it. This is the rumor mill here, then this is the news. Yes, the U.S. government is going to do it. Somebody knew something here. This is the gap up, and then we’re off to the races. This has had a heck of a move.

The problem I have with MP Materials is this is now a $12.5 billion market cap company. Revenue is only $242 million. Profit margin is negative 42%. Operating margin is negative 77%. The balance sheet looks decent because they got an investment from the government.

They have $753 million-plus in cash and about $944 million in debt. So it’s not a pristine balance sheet. It’s okay. We’re talking about 177 million shares here, 133 million floating shares.

One thing that’s been helpful to MP Materials’ rocket ride higher is there’s a consistent short interest position here, averaging about 15% and at times reaching 20%. But now it’s down to about 15%. Anytime there’s news or anybody wants to jump on the MP Materials bandwagon, the shorts have to cover because they continue trying to hold off against this onslaught. That’s MP Materials.

Is it an interesting play? Yes, because the bottom line for MP Materials is the government is essentially going to buy output from MP Materials at a set price, which puts a floor under their selling price. That’s positive for MP Materials, but it doesn’t mean the stock won’t come back down at some point and pull back because there are other companies that the U.S. might invest in. MP Materials looks pretty good, especially if you owned it a while ago. You’ve enjoyed a heck of a ride. But is it a buy versus the other company everyone’s talking about? The U.S. is now talking about Lithium Americas, and everyone’s like, “Uh-oh, it’s a stock that’s been all over the place sliding down.”

Then you see this huge gap here as Lithium Americas jumped yesterday 19.25%. Here’s a company with a $1.66 billion market cap now after yesterday’s move. It has no revenues. It has no profit margin because it doesn’t produce anything.

It doesn’t have a profit margin. This is an empty promise at this point. This is the promise that this company will be able to produce lithium from its Thacker Pass mine. Now it’s created some kind of partnership with General Motors, a joint venture.

The government said, “Well, this looks interesting, but the company needs money.” So the U.S. decided they’re going to loan Lithium Americas $2.26 billion, but they’re going to charge them interest.

That was all well and good except they’ve got to produce that. So there’s a lot of execution risk with Lithium Americas Corp. Markets don’t care because now the stock is up something like 250% from its flat line down here on a skyrocketing move. In the pre-market here, it’s up almost 4.5% this morning, Wednesday morning.

Again, more news about the United States wanting to invest or lend money to what we now look at from the U.S. point of view as strategic companies. It’s nothing different than what China does: backing certain industries, providing cheap loans. This is the same game that the Chinese play. The United States is getting into that socialist game where we’re backing companies, picking winners and losers.

That’s a whole other topic for another time, whether that’s good or bad. Personally, I’ll just leave it at: it’s not capitalism the way we know it here in the United States. It’s about picking winners and losers. What happened here is this loan was supposed to help Lithium Americas’ construction of its Thacker Pass lithium project in Nevada.

It needed that much money to move that forward. That tells you a little bit about how the company was doing before the help from the U.S. government. The U.S. didn’t get anything for that. They’re like, “Well, we’ll get interest on this loan, but we’ll help you do this because it’s in our interest to get lithium sourced from the United States.”

The problem was that people started saying, “Well, why are we just making loans with interest? That’s not our job. Why didn’t they get a loan from the bank? If their credit isn’t good enough, then we shouldn’t be backing them.”

So now the United States is grappling with: “Wait a second, this wasn’t a good deal for taxpayers.” So we want something. Now they’re talking about getting a 5% equity interest, maybe getting a 5% equity interest in the Thacker-GM joint venture.

Basically extracting something from Lithium Americas for the loan. That’s certainly in taxpayers’ interest. But here’s another issue with Lithium Americas. It hasn’t done anything yet.

It hasn’t pulled anything out. The contracts don’t mean anything. The loan doesn’t mean anything. There’s still – same thing with MP Materials – execution risk.

So Lithium Americas, yeah, has gone up. MP Materials has gone up even significantly more.

Which is a buy? Which isn’t a buy?

I say MP Materials is a buy. We can’t chase it up here. No.

Maybe see if it comes down, maybe consolidates a little bit down here in the 70s range. It could keep going from here, but I’d rather buy MP Materials because it’s going to have a base for the materials it extracts. In other words, there’s going to be a floor under it because of the contracts it’s going to get from the government – because the government has a material interest in terms of its investment. So yes, MP Materials over Lithium Americas. I know these stocks look crazy. It’s a crazy market. But yes, I would buy MP Materials and not Lithium Americas.

That’s your BTNT for today.

Catch you next week. Cheers.