A significant private financing round secured by USA Rare Earth earlier this year is now under congressional examination, casting uncertainty over the company’s stock and its access to critical government funds. A group of U.S. senators is probing the deal for potential conflicts of interest, with questions reaching into the Department of Commerce.
Political Probe Targets Financing and Grants
The investigation centers on a Private Investment in Public Equity (PIPE) transaction completed in January. Democratic senators are examining whether Commerce Secretary Howard Lutnick was compromised due to his former firm, Cantor Fitzgerald, serving as the lead placement agent. As the firm is now run by Lutnick’s sons, the probe seeks to determine if the Secretary’s family stood to benefit financially from the deal.
This private capital raise was a prerequisite for the company to receive a substantially larger package of federal grants. The senators’ review is assessing whether the subsequent award of these government funds was lawful. The market is now questioning whether the company can navigate this political scrutiny without disruptions to its operational timeline.
Should investors sell immediately? Or is it worth buying USA Rare Earth?
Stock Volatility Amid Ambitious Operational Goals
News of the investigation injected volatility into the company’s share price. After falling to a low of $19.76 two days ago, the stock stabilized somewhat around $20.13 in the latest session. Despite a decline of approximately 24% over the past month, the equity retains a strong year-to-date gain of 69%. USA Rare Earth currently commands a market valuation of $4.4 billion.
Operationally, the company’s targets remain aggressive. While it reported no revenue at the end of 2025, it aims to commence production at its Oklahoma processing facility in the first half of 2026. Management is targeting revenue of $2.6 billion by 2030. However, mining operations at its key Texas site are not scheduled to begin until 2028.
The coming weeks are critical, as the Commerce Department’s response to the congressional inquiry will likely influence the stock’s direction. Should the investigation result in delays to the disbursement of state funds, the company’s ability to meet its 2026 production goals could be at risk.
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