Why MP Materials Fell as Much as 19% Today

The rare earth metals company was the subject of a negative research report and investors got spooked.

Reuben Gregg Brewer

(TMFReubenGBrewer)

Feb 3, 2022

Key Points

• A short-seller outlined its concerns about MP Materials and worried investors quickly sold the stock.

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Editor's note: This article has been updated to include the company's response to the report.

What happened

Shares of MP Materials (NYSE:MP), which is looking to be an integrated North American producer of rare earths metals, fell as much as 19% on Feb. 3. The only news out of the company was the date of its upcoming fourth-quarter 2021 earnings release. That was a non-event, so it was probably the short-seller report that also came out today that was the cause of investor concerns.

So what

Bonitas Research, which is openly short MP Materials, released a document today outlining its concerns about MP Materials' business. These types of research reports often cause investors to sell the target company, fearing that the information contained in the report is accurate. That's not an unreasonable response, but it is important to note that Bonitas has a vested interest in seeing the stock move lower. In other words, reports like this should be taken with a grain of salt.

MP Materials responded to the report on Twitter and said Bonitas should be added to the "long list of detractors that fail to understand our business, deceptively manipulate competing sets of data, and bet against" MP Materials.