USA Rare Earth Inc. (USAR) reported first-quarter revenue of $5.7 million, falling short of expectations, while its net loss widened to $67.0 million, a sharp reversal from net income of $51.8 million in the same period last year. The company ended March with a robust cash position of $1.75 billion, bolstered by a $1.5 billion private investment in public equity (PIPE) completed during the quarter.
The adjusted net loss came in at $24.1 million, or 12 cents per diluted share, compared to a profit a year earlier. Operating loss for the quarter was $36.7 million. Cash burn from operations totaled $18.6 million, while capital expenditures and equipment deposits consumed $38.6 million.
Government Support and Strategic Deals
USA Rare Earth expects to finalize documents this month to secure $1.6 billion in funding from the U.S. Commerce Department, a critical step as investors assess the company's ability to execute its ambitious rare-earth project. Additionally, Texas awarded a $14.18 million grant through the Texas Semiconductor Innovation Fund for the Round Top Mountain heavy rare-earth project in Hudspeth County, which is projected to create approximately 260 jobs and drive over $1.4 billion in capital investment in West Texas.
In April, the company agreed to acquire Brazil's Serra Verde for $2.8 billion in cash and stock. The deal, targeted to close in the third quarter pending regulatory approvals, would make USA Rare Earth the only significant non-Asian producer of all four magnetic rare earths.
China Supply Crunch Intensifies
The earnings report comes amid ongoing Chinese controls on heavy rare-earth exports. Chinese customs data shows exports of yttrium, dysprosium, and terbium are down roughly 50% since restrictions took effect in April 2025. These heavy rare earths are essential for aerospace, defense, semiconductors, and high-powered magnets.
CEO Barbara Humpton described the quarter as one of “fundamental transformation,” highlighting the PIPE financing, progress on consolidating the Round Top project, and the launch of Phase 1a at the Stillwater magnet facility in Oklahoma.
Analyst Sam Brandeis of Wedbush raised his price target on the stock to $35 from $29, maintaining an Outperform rating, citing growing urgency on heavy rare-earth supply policy and momentum through the company's mine-to-magnet value chain.
Shares of USA Rare Earth closed at $25.42, down 0.5% on the day. Peers MP Materials fell 2.8% and Energy Fuels dropped 3.6%, reflecting a broader sell-off in rare-earth stocks.
Despite the strategic moves, risks remain. In a May 13 SEC filing, Serra Verde noted that the merger might miss its projected timeline or fall through entirely. The company also cautioned that U.S. government financing is subject to final agreements and approvals. Industry experts warn that fully replacing China in rare-earth supply is still years away, as noted by David Merriman of Project Blue.
