Here's Why USA Rare Earth Stock Crashed in November

Shares in USA Rare Earth (NASDAQ: USAR) crashed by 30.8% in November, according to data provided by S&P Global Market Intelligence. It's the kind of performance that highlights the highly speculative nature of investing in rare-earth companies in the current environment, not least due to their sensitivity to political developments. The simple fact is that China dominates the market for rare-earth materials and rare-earth magnets, producing up to 90% of the world's supply of the latter. This gives the country a strong bargaining position in trade disputes with the U.S., and it also gives the Trump administration a powerful incentive to take measures to ensure a long-term domestic supply of rare-earth materials and magnets. As such, whether investors like it or not, stocks like USA Rare Earth will be influenced by developments in trade negotiations and speculation surrounding them. Consequently, USA Rare Earth stock soared in October on the news that China planned to implement new export controls on rare-earth materials. The idea being that the U.S. administration would be more likely to implement the kind of favorable actions (investments, purchasing agreements, and other support) toward USA Rare Earth as it did with MP Materials. Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool