What a roller-coaster ride it has been this year for the Lynas Rare Earths Ltd (ASX: LYC) share price.
After starting the year flat, shares in the world's second-largest producer of rare earths tumbled in late January.
However, this was short-lived with a quick rebound in late February following the company's release of its interim results.
Last week, Lynas shares climbed by more than 10%, hitting a 1-month high of $11.21.
Nonetheless, investors headed for the exits sending the share price down 10% this week alone.
At the time of writing, Lynas shares are swapping hands for $9.64 apiece, a loss of 3.64% for today.
Why is the Lynas share price so volatile?
While the company's reported an outstanding financial scorecard for the first-half of FY22, investors have been looking to cash in.
This is because Lynas produces Neodymium-Praseodymium (NdPr) which is a magnetic rare earth alloys used in many modern technologies.
The price of NdPr has mostly soared in the past few weeks as Western countries try to limit China's rare earths dominance.
Lynas is considered to be the world's second largest producer of NdPr, behind the Asian giant. The latter accounted for 60% of the global production of rare earths last year.
In case you were wondering, rare earths are a group of 17 metals that are critical to the manufacturing of many electronic products. These include mobile smartphones, electric vehicles, aircraft engines, wind turbines, and even military equipment.
With geopolitical tensions rising between the West and Russia, and China sidelined for now, the supply of rare earths could not be more important.
Lynas is seeking to disrupt China's supply of rare earths and become a vital company for advanced economies.
However, for this to happen, the company will need to increase production output significantly.
In the six months ending 31 December, Lynas was marred with shipping delays that impacted NdPr production. Output fell to 2,614 tonnes compared to the 2,709 tonnes achieved in the prior corresponding period.
On a positive note, strong demand for rare earths is reflected in market pricing which led to Lynas achieving a record profit of $156.9 million. This reflected a 286% increase when measured against H1 FY21.
What do the brokers think?
After releasing its half-year results, one broker rated the company with a favourable price point.
Analysts at Macquarie raised its 12-month price target for Lynas shares by 2% to $12.60.
Based on the current share price, this implies a potential upside of more than 30% for investors.
