USA Rare Earth (USAR) Tumbles 4.3%, Here's Why

We recently published 10 Losing Stocks in an Otherwise Optimistic Market. USA Rare Earth Inc. (NASDAQ:USAR) was one of the worst performers on Wednesday.

USA Rare Earth extended losses for a second day on Wednesday, shedding 4.31 percent to finish at $18.20 apiece as investors parked funds amid the absence of fresh catalysts to boost buying appetite.

Despite the decline, USA Rare Earth Inc. (NASDAQ:USAR) was notably up by 53 percent year-to-date, albeit its month-to-date tally showed a decline of 18.8 percent.

Last month, the company announced a series of developments that saw the successful raising of as much as $3.1 billion in fresh funds. This includes the US government’s $1.6 billion financial backing, involving $1.3 billion in senior secured loans under the CHIPS Act, as well as another $277-million in proposed federal funding.

Additionally, USA Rare Earth Inc. (NASDAQ:USAR) raised another $1.5 billion from a private investment in public equity (PIPE) financing with strategic investors, covering the sale of 69.8 million common shares at a price of $21.50 per share.

The total capital is expected to help accelerate USA Rare Earth Inc.’s (NASDAQ:USAR) expansion initiatives, which will include the extraction of 40,000 metric tons (MT) per day of rare earth and critical mineral feedstock from its Round Top deposit; processing of a combined 8,000 MT per annum of third-party MREC and heavy rare earth elements, critical mineral oxides and concentrates; reshoring of 10,000 MT per annum of heavy REE metal- and alloy-making and strip-casting capacity; increase in neodymium-iron-boron magnet-making capacity to 10,000 MT per annum; and processing of 2,000 MT per annum of swarf from the NdFeB magnet production.

While we acknowledge the potential of USAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.