Something wrong with this pictureI am new to this sector. Bot my first ever rare earth position a week or two ago with NEO.
Forgive my naivete. What is wrong with my thinking here?
Today, Mountain Pass went up a little more than $2 US. With about 165 million shares out, that's a market cap increase of US$330 million. Reason touted was the imposition of 25% or more tariffs on Chinese rare earth magnets. MP is about to produce some 1000 tonnes per year of NdFeB magnets starting next year, enough to support 500,000 EV motors, and all production presumably pre-sold to General Motors.
Meanwhile, in a similar timeframe, as in next year, Neo is supposed to start producing enuf magnets to support the manufacture of 1.5 million cars. So about 3X the capacity of MP's Texas plant. Does ANYBODY think the Europeans are less protectionist than the Americans? Shouldn't NEO have had a similar valuation bump as Mountain Pass, maybe even a lot more?
A quick glance shows that a US$330 million bump to MP's valuation should have added C$445 million to the market cap of NEO. From what I see, NEO has 41.75 million shares. It should have appreciated C$10.65 yesterday, to keep pace with the valuation of Mountain Pass if it's only about magnets.
There is a BIG dis-connect here. I am not so brave, but somebody should be buying NEO and shorting MP. No?