USAR and TMC Stocks Slide After Failing at Resistance as Reality Check Dampens Rally for Rare Earth
As investors reevaluate recent speculative gains due to long profitability timeframes and earnings reports, USAR and TMC stocks are plummeting.
Quick overview
- USAR and TMC stocks are experiencing significant declines as investors reassess speculative gains following recent earnings updates.
- Despite USA Rare Earth exceeding quarterly revenue expectations, the company remains in a pre-profitability phase, with net profits not anticipated until 2028.
- The Metals Company also faced pressure after reporting a first-quarter loss, highlighting ongoing challenges in the deep-sea mining sector.
- Investor sentiment is shifting towards caution as both companies navigate long timelines for profitability amidst structural demand for critical minerals.
As investors reevaluate recent speculative gains due to long profitability timeframes and earnings reports, USAR and TMC stocks are plummeting.
Profit-Taking Hits Rare Earth Stocks After Strong Multi-Week Run
Shares of USA Rare Earth and The Metals Company came under heavy selling pressure following recent earnings releases, as investors reassessed the gap between long-term strategic potential and near-term financial realities.
USA Rare Earth had been in a steady two-week rally, pushing into key technical resistance levels earlier in the week. However, the stock failed to break through and reversed sharply, with USAR slipping below the $28 level. TMC followed a similar trajectory, sliding toward the $6 range as momentum across the sector faded. The move reflects a broader shift from speculative accumulation to profit-taking after an extended upside move.
Earnings Reinforce Long Path to Profitability
Despite USA Rare Earth reporting quarterly results that exceeded Wall Street expectations, the broader message from the earnings update remained cautious. The company continues to operate in a pre-profitability phase, with analysts surveyed by S&P Global Market Intelligence not expecting net profits until around 2028. Even more distant is the expectation of positive cash flow, which is not forecast until 2029.
This extended timeline is beginning to weigh on sentiment, particularly after recent price gains had already incorporated a significant portion of future growth expectations. As a result, investors appear increasingly sensitive to any signs that execution may take longer than previously assumed.
Strategic Developments Previously Fueled Optimism
Earlier strength in USA Rare Earth was driven by a series of strategic announcements that reinforced its long-term positioning in the critical minerals supply chain. The company secured access to rare-earth raw materials sourced outside China, a development seen as important amid ongoing efforts by Western economies to diversify supply chains.
In addition, USA Rare Earth announced a $2.8 billion agreement to acquire Serra Verde Group, a Brazilian mining and processing firm with established rare-earth production capabilities. These developments helped fuel optimism that the company could play a meaningful role in reshaping global supply dynamics.
USAR Chart Daily – Failing at the $32 Resistance Again
Those developments helped position the company as a potential strategic beneficiary of growing geopolitical efforts to diversify global critical mineral supplies. However, with those catalysts already reflected in the share price, the earnings report became an opportunity for investors to lock in gains rather than increase exposure.
USAR Q1 2026 Financial Highlights
- Earnings Per Share (EPS): Normalized (-$0.12) per share (GAAP EPS was (-$0.34).
- Revenue: ($5.70) million, comfortably beating the Street’s estimate of ($4.23) million.
- Key Milestones: The company successfully executed a ($1.5) billion PIPE financing and announced the consolidation of the Round Top project.
Deep-Sea Mining Story Faces Similar Pressure
The Metals Company also experienced renewed downside pressure following its latest earnings update. The company reported a first-quarter loss of $0.05 per share, broadly in line with expectations, but remains without revenue as it continues to operate as a pre-commercial deep-sea mining venture. Net losses reached $20.6 million for the quarter.
TMC Stock Daily – The 200 SMA Stopped the Run Higher
The company continues pursuing long-term opportunities tied to deep-sea mineral extraction, particularly for metals used in battery technologies and energy infrastructure. However, investors remain cautious about the enormous regulatory, environmental, and financing challenges surrounding the industry.
TMC Q1 2026 Financial Highlights
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- Net Loss: (-$20.5) to (-$20.6) million (flat compared to Q1 2025).
- Free Cash Flow: Improved to (-$0.6) million, up from (-$9.4) million in the prior-year period.
- Liquidity: Ended the quarter with ($119.7) million in cash and total available liquidity of ($164) million, including an undrawn credit facility.
- Management forecasts continued negative EPS as the company remains in the pre-revenue exploration and evaluation phase while awaiting commercial approval for deep-sea nodule harvesting.
- The company’s next earnings report is slated for August 13, 2026.
Outlook: Strong Themes, Elevated Execution Risk
Both companies remain closely tied to long-term themes of energy transition, critical mineral security, and supply-chain diversification. However, the latest selloff highlights growing investor caution toward firms reliant on future commercialization rather than current earnings.
While structural demand for rare earths and battery materials remains supportive, volatility is likely to persist as markets balance strategic upside against prolonged profitability timelines and financing uncertainty.
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