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MP Materials, USA Rare Earth Extend Record-Breaking Rally, Hurting Short Sellers

$MP Materials Corp.(MP)$   and $USA Rare Earth Inc.(USAR)$   extended their record-breaking rally Monday, adding pressure on short sellers.

Shares gapped higher Monday, with MP Materials climbing to a fresh intraday record of $91.78, after $JPMorgan (JPM.US)$ announced plans to invest $1.5 trillion into industries that are critical to U.S. national security and economic resilience, ramping up the allocation of capital to sectors including rare earth minerals.

Trading activities for borrowed MP Materials shares that were sold short jumped Friday just as the stock of the producer of rare earth materials extended this year's rise, weakening the case for betting against the company that has secured backing from the U.S. government. 

Monday's gains took this year's rally to 475% for the company that has already announced in July a $1 billion commitment from JPMorgan and $Goldman Sachs (GS.US)$ to finance the construction of its magnet manufacturing facility. In that same announcement, the company said it secured a $400 million investment from the Department of Defense in April 

Short volume rose to 5.13 million borrowed MP Materials shares on Friday, from 3.39 million shares a day earlier. The stock jumped as much as 17% to $84.92 on Friday, before reaching a fresh all-time intraday high in the following trading session. 

$USA Rare Earth (USAR.US)$ also saw its short volume jump to 4.47 million shares Friday, from 1.69 million a day earlier, exchange data showed. Short interest, or the tally of shares sold short that haven't been closed yet fell to 7 million shares on Sept. 30, from 7.47 million two weeks earlier. 

Short sellers retreated before China unveiled new export curbs on rare earth materials, fueling optimism that the U.S. government will pour money to develop the domestic industry and reduce its reliance on imports.  

USA Rare earth jumped to a new intraday record high of $43.55 before paring gains to 31% to $42.50. 

$NVIDIA (NVDA.US)$, $UiPath (PATH.US)$, $Rocket (RKT.US)$, $TeraWulf (WULF.US)$, $CleanSpark (CLSK.US)$ were also among the stocks that saw notable changes in short volume. See more details below.

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