USAR Falls Below 50-Day SMA: Is It Time to Hold or Exit the Stock?

USA Rare Earth, Inc. USAR has fallen below its 50-day simple moving average (SMA). This SMA is a widely used technical indicator that helps forecast future price trends, identify potential support and resistance levels, and generate clear buy or sell signals. On Sept. 9, 2026, the stock closed at $17.06, below its 50-day SMA of $17.54. The stock is also trading below its 200-day moving average of $19.26. This reflects a bearish trend and indicates growing investor concern.

USAR Stock’s 50-Day & 200-Day Moving Averages

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The recent weakness is primarily due to USA Rare Earth's continued operating losses, which are adding pressure to its near-term financial performance. The company is still in the early stages of commercial production and has not yet generated revenues from its sintered NdFeB magnets, while its aggressive capacity expansion requires significant capital spending that may continue to pressure near-term cash flow before these investments begin contributing to earnings.

Reflecting these headwinds, USAR shares have declined 18.8% over the past six months, underperforming the industry and the S&P 500, which have returned 6.7% and 13.3%, respectively. The company’s peers like BHP Group Limited BHP and MP Materials MP have gained 18.3% and lost 14.5%, respectively, over the same time frame.

USAR's Six-Month Price Performance

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Key Risks Could Limit Growth

Though USAR continues to make steady progress at the Stillwater magnet manufacturing facility in Oklahoma as it ramps up commercial production, it has not yet generated revenues from sintered NdFeB permanent magnets. The company still faces execution risks as it ramps production and scales manufacturing operations. USA Rare Earth has not yet generated revenues from mineral production either, with all revenues in the first six months of 2026 coming from its Less Common Metals metal-making operations acquired in November 2025. As a result, delays in achieving commercial-scale production could limit revenue growth and prolong the company's path to profitability.

USAR continues to face profitability pressure as it remains in the investment and commercialization phase. In the first six months, the company reported a net loss attributable to USA Rare Earth of $77.3 million, while its loss from operations widened to $83 million from $17.5 million in the year-ago period. Its operating expenses jumped to $81.5 million from $17.5 million in the same period, due to higher selling, general and administrative expenses, research and development costs and amortization. Despite generating $11.5 million in revenues during the period, the company reported a negative gross margin of 12.8%.

The weak profitability is accompanied by substantial cash requirements. In the first six months of 2026, USAR used $75.3 million in cash for operating activities, up from $18.2 million reported in 2025. In the same period, investing activities consumed another $108.4 million due to an increase in capital expenditures related to the Stillwater Facility. The company will require further spending on Round Top, Stillwater, Blacksburg and the Less Common Metals-Europe facility, placing additional pressure on its cash resources.

USAR also faces feedstock risks as its integrated mine-to-magnet strategy remains under development. Until the Round Top Project can meet its requirements, the company depends on external sources for rare earth oxide and metal feedstock. The availability of these materials in sufficient quantities and at commercially viable prices will be important for the development and operation of the Stillwater Facility. Supply shortages, higher input costs or disruptions may increase expenses and affect production plans.

Strategic Growth and Expansion

In September 2026, USA Rare Earth completed its combination with Serra Verde Group, strengthening its position in the global rare earth market. Serra Verde operates a rare earth mining and processing facility in Brazil. The combination expands USAR’s upstream, midstream and downstream assets across the United States, United Kingdom and France, creating a more integrated rare earth platform. The deal is expected to enhance the company’s ability to supply critical rare earth materials and permanent magnets.

USAR has strengthened its growth strategy through financing. In June 2026, the company secured access to up to $1.6 billion in government-backed funding under the CHIPS Program from the U.S. Department of Commerce. The package includes up to $277 million in federal funding and up to $1.3 billion in loan support as the company advances key development milestones.

In May 2026, USA Rare Earth secured a $14.2 million grant from the Texas Semiconductor Innovation Fund to boost the development of its Round Top Mountain rare earth project in West Texas, aimed at supporting domestic supply chains for critical minerals used in defense, semiconductors, AI and advanced technologies.

USAR operates in the mineral exploration and mining markets, which include major industry players like BHP Group and MP Materials.

USAR’s Estimate Revisions

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The Zacks Consensus Estimate for USAR’s bottom line for 2026 has decreased in the past 60 days.

Valuation

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From a valuation standpoint, USA Rare Earth is trading at a forward price-to-sales ratio of 7.79X compared with the industry average of 1.43X. In comparison, BHP Group and MP Materials are trading at 3.92X and 13.48X, respectively.

Final Take

USAR faces near-term pressure from continued losses, negative gross margins, high cash requirements and execution risks, which could weigh on profitability. However, the completion of the Serra Verde combination, access to significant government-backed funding and grants for the Round Top Project provide key growth opportunities. Despite these positives, the company's early-stage operations and significant capital requirements suggest continued caution around its near-term prospects.

USA Rare Earth currently carries a Zacks Rank #4 (Sell), suggesting investors may consider selling the stock given the near-term challenges and significant investment requirements.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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