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USA Rare Earth Posts Strong Q1 2026 as Massive Serra Vera Deal LoomsWritten by Leo Miller. Posted: 5/20/2026. 
Key Points
- USA Rare Earth is making big moves as it looks to shake up the rare earth industry outside of China
- The firm posted better-than-expected Q1 financials and provided an update on its $1.6 billion government funding proposal
- Meanwhile, the company is working to close its Serra Verde acquisition, which would provide access to one of the world's top rare-earth assets outside China
- Special Report: Elon Musk: This Could Turn $100 into $100,000
USA Rare Earth (NASDAQ: USAR) is aiming to fill a market gap created by geopolitical uncertainty. Along with mining companies like MP Materials (NYSE: MP), USA Rare Earth is helping the United States loosen China’s chokehold on rare earth elements (REEs). China controls most of the world’s REE mines and 94% of permanent magnet production—the vital end product of REEs. This is a pressing issue, as permanent magnets are essential to many modern technologies, including advanced weaponry. The United States does not want to find itself in a position where China can cut off its production capabilities.
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Ultimately, USA Rare Earth’s goal is to become a vertically integrated mine-to-magnet producer. Recently, the company delivered its latest earnings report, offering insight into how it is progressing toward that goal. USA Rare Earth Posts Beats, Government Funding Deal Sees a DelayAs an early-stage company, demonstrating operational progress is far more important than near-term revenue or profit generation. That said, the company’s financials still matter—investors want to see it stay on budget and avoid unnecessary cash burn. Luckily, in its latest quarter, the firm posted better-than-expected results. USA Rare Earth generated revenue of $5.7 million in Q1 2026. It recorded no revenue a year ago. The figure easily beat estimates of $4.2 million. The company also topped expectations on the bottom line, with an adjusted loss per share of 12 cents, significantly better than the 16-cent loss analysts had forecast. However, loss per share can be a misleading metric. Because USA Rare Earth issues a large number of shares, its loss per share can decline even if actual losses increase, which is exactly what happened in Q1. Adjusted loss per share improved from 14 cents a year ago, but the company’s adjusted net loss more than doubled to $24.1 million. The takeaway is that USA Rare Earth’s profitability is worsening, not improving. Still, that is fully expected for an early-stage company, and USA Rare Earth has plenty of capital to absorb losses. The firm ended the quarter with $1.75 billion in cash after receiving $1.5 billion in proceeds from a private investment offering. Additionally, the company said it expects to complete the definitive documentation for its $1.6 billion Department of Commerce funding in May. While that is a delay from previous expectations that the process would wrap up in April, getting the funding is what matters. Importantly, the company notes that the terms of the deal have not deteriorated. USA Rare Earth Presses Forward, Looks to Enhance Position With Serra VerdeThe company also remained on track with several operational milestones. It continues to expect to begin fulfilling sales of sintered magnets in Q2 2026. USA Rare Earth also still expects its Stillwater magnet capacity to reach 600 metric tons per annum (MTPA) by the end of 2026. Expectations for 1,200 MTPA in Q1 2027 remain intact as well. However, its planned $2.8 billion acquisition of Serra Verde is by far the biggest development in recent months. The company notes that Serra Verde is the first and only scaled producer of all four magnetic rare earth elements outside Asia. These elements are neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). Gaining this asset would be a clear win for USA Rare Earth, accelerating its mine-to-magnet buildout and offering a key advantage over MP Materials. MP’s mines are rich in only light rare earth elements like Nd and Pr—not heavy rare earths like Dy and Tb. Notably, making advanced technologies such as missile guidance systems requires adding heavy rare earths. With Serra Verde, USA Rare Earth would have access to both light and heavy REEs, a strategic advantage over MP. The combined company is targeting an EBITDA run rate of $550 million to $650 million by the end of 2027. USA Rare Earth also notes that the cash position of the combined firm would be $3.2 billion, far higher than its current balance. However, the acquisition would be highly dilutive for shareholders. USA Rare Earth plans to issue 127 million shares to fund the deal. That is substantial compared to its current share count of nearly 233 million. Even so, shares surged 13% on the day of the announcement, suggesting investors valued the strategic benefits of the deal over the dilution risk. USA Rare Earth Awaits Deal Closing After Good QuarterOverall, USA Rare Earth had a solid latest quarter, posting better-than-expected financial results and continuing to execute on operational goals. Meanwhile, acquiring Serra Verde could be a game-changer, potentially making the company an anchor in the non-China market. Still, the deal has yet to close, with finalization expected in Q3 2025. After closing, USA Rare Earth plans to host its Investor Day. As the company provides more details about its strategy at that event, it will be an important point to re-evaluate USAR’s future. |
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