MP Materials Falls After Bonitas Research Short Report Alleging Price Manipulation

By Sam Boughedda — Mp Materials Corp (NYSE:MP) shares fell to a three-month low Thursday following a short report from Bonitas Research, who said the company, "executed an abusive transfer price manipulation scheme" with Shenghe Resources Holding (SS:600392), a publicly-traded Chinese state-owned rare earth metals refiner and producer.

Shenghe holds an 8% stake in MP shares. Bonitas said Shenghe was previously a, "100% customer who had rights to 100% of MP's production and 100% of MP's net income until Shenghe fully recouped its investment."

"We believe that since 2Q'21, MP and Shenghe executed an abusive transfer price manipulation scheme whereby Shenghe overpaid for MP concentrates to artificially inflate MP's profits," Bonitas said in its report, adding that it coincided with the "SPAC insider lock-up expiration so that MP Insiders could sell MP stock at artificially inflated prices."

The investment research firm also pointed to a German academic economic study that concluded that MP's ore from the Mountain Pass mine in California is not economically viable to harvest for rare earth metals.

While they didn't disclose a price target, Bonitas said it is short MP.

Since the release, MP Materials has rejected the allegations in a series of tweets, saying they "welcome @BonitasResearch to the long list of detractors that fail to understand our business, deceptively manipulate competing sets of data, and bet against $MP."

Back in October, Grizzly Research also issued a short report on MP Materials, stating they believe Shenghe, "can be traced back to the Chinese central government," and "MP in reality remains under the control of the Chinese government."

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