New York, Jan 28, 2026, 12:47 PM ET — Regular session
- Shares of USA Rare Earth tumbled sharply in midday trading, following a recent surge fueled by U.S. government backing.
- The company revealed plans for a $1.6 billion federal package alongside a $1.5 billion private placement.
- Traders are zeroing in on closing terms, dilution concerns, and the path forward to binding agreements.
Shares of USA Rare Earth (USAR) dropped 6.3% to $24.70 by midday Wednesday, after hitting a high of $26.66 earlier. The stock’s been choppy since the company revealed new government support for its mine-to-magnet project.
The shift happens as investors debate if a proposed U.S. financing package will actually translate into cash—and what conditions might come attached. This week, USA Rare Earth announced it had secured a non-binding letter of intent connected to the Commerce Department’s CHIPS program, which aims to bolster semiconductor-related supply chains. Reuters
The CHIPS Program Office detailed a letter offering up to $277 million in direct funding alongside a senior secured loan of as much as $1.3 billion, aimed at backing projects in Texas and Oklahoma. The agency added that the Commerce Department is set to receive around 16.1 million shares plus a warrant for about 17.6 million additional shares. NIST
USA Rare Earth, headquartered in Stillwater, Oklahoma, announced the funding package will boost production of neodymium-iron-boron permanent magnets—a crucial component in electric motors and various industrial uses—and speed up development at its Round Top facility in Texas. CEO Barbara Humpton called the deal a “landmark collaboration with the U.S. Government” and said it marks a “transformative step.” GlobeNewswire
The company disclosed in a regulatory filing that it has inked a securities purchase agreement for a $1.5 billion private placement, selling 69,767,442 shares at $21.50 apiece. The deal is set to close on Jan. 28, pending usual conditions. The 8-K also detailed terms tied to government transactions, featuring a 15-year loan priced at Treasury plus 150 basis points (1.5 percentage points). It outlined various requirements and milestones that must be met for funds to be disbursed incrementally.
Analysts reacted swiftly. Canaccord bumped its price target to $33 from $23, maintaining a buy rating. The upgrade reflects the new financing route and an accelerated operational timeline. However, the firm flagged that this deal doesn’t include the price floors or safeguards present in the government’s previous agreement with MP Materials, according to a research note summary shared by TheFly. TipRanks
The government’s push fits into a larger strategy to cut U.S. reliance on China for critical minerals and processing capabilities. According to the Associated Press, China handles over 90% of the world’s critical minerals processing. Washington has also supported other domestic supply-chain initiatives, such as MP Materials. AP News
On Wednesday, MP Materials slipped roughly 1.1% in rare-earth and critical-minerals trading, while Lithium Americas dropped around 5.3%.
Execution remains the biggest question mark for USAR. The government backing is only a letter of intent, not a firm commitment. The company has warned that missing deadlines or funding goals could force it to scale back or chase financing on harsher terms. StreetInsider.com
USA Rare Earth is accelerating its schedule. Back in December, the company set a target to begin commercial production at Round Top by late 2028, advancing from the original 2030 date. Reuters
The next key event for investors is the expected close of the $1.5 billion private placement on Jan. 28. Afterward, the focus will shift to whether the Commerce Department and the company finalize definitive agreements, and how fast the staged funding can be accessed. whitecase.com
