USA Rare Earths Plummets 6% After Inclusion in Leverage ETF: What Happened?
USA Rare Earth Inc. (USAR), a U.S.-listed rare earth company, closed at $16.67 on Nasdaq on January 13 (local time), down 6.09% from the previous trading day. Its market capitalization fell by roughly $140 million to about $2.46 billion. Trading volume surged to more than 10.58 million shares—well above the norm—reflecting the combined impact of a newly launched leveraged ETF and short-term profit-taking.
On that same day, thematic asset managers in the U.S. and Europe confirmed the launch of single-stock leveraged ETFs based on USA Rare Earth. The “Leverage Shares by Themes” brand unveiled a new ETF that includes USAR among six underlying stocks. Another issuer, Tradr ETFs, also introduced a 2× leveraged ETF that incorporates USAR within its rare earth and critical-metals basket. The proliferation of derivatives tied to USAR drove a sharp influx of short-term trading demand, and the clash between profit-taking on recent gains and fresh leveraged flows amplified volatility.
USA Rare Earth pursues full vertical integration of the U.S. rare earth value chain, from mining and refining to magnet production. Anchored by the Round Top deposit development in Texas and a neodymium permanent-magnet facility in Steelwater, Oklahoma, the company’s core strategy is to build an American supply chain that reduces dependence on China. After going public on Nasdaq in 2025 via a SPAC merger with Inflection Point Acquisition Corp. II, the company raised additional capital—including PIPE investments—and deployed hundreds of millions of dollars toward facility build-outs. More recently, it acquired UK alloy producer LCM and forged partnerships with Solvay and Arnold Magnetic Technologies, extending its reach across the rare earth magnet value chain.
Still in its pre-commercial production phase, USA Rare Earth is prioritizing facility completion and capacity build-out over short-term earnings. The Steelwater magnet plant is currently in pilot production and undergoing customer qualification ahead of its targeted Q1 2026 commercial start-up, while the Round Top project aims to complete a preliminary feasibility study in the second half of 2026. With the U.S. government and other Western nations pushing to diversify rare earth supply chains for defense, electric vehicles and wind power, many analysts see substantial medium- to long-term growth potential if the company scales production and sales as planned. That said, inclusion in leveraged ETFs has heightened near-term volatility, suggesting the share price may swing widely in response to policy shifts, supply-demand dynamics and technical triggers.