TMC The Metals Company (TMC -4.80%) stock got hit with a significant pullback in July’s trading. The company’s share price slumped 10% in a month of trading that saw the S&P 500 index rise 2.2% and the Nasdaq Composite index jump 3.7%.

While the broader market rose in relation to developments that suggested that the U.S. and China could be moving closer to a trade deal that would lower tariffs and resolve other key issues, TMC stock saw a pullback as a result of the news. On the other hand, recent pullbacks for its share price come on the heels of a massive valuation run-up for the company this year.

TMC stock lost ground amid U.S.-China trade developments

Last month, the Trump administration announced that it was lifting licensing requirements and export restrictions that effectively prohibited high-end artificial intelligence (AI) chips from Nvidia and AMD from being sold to the Chinese market. Export restrictions and licensing requirements on semiconductor manufacturing equipment are also being lifted. The big shift on key tech exports to China represented a concession from President Donald Trump in order to increase the likelihood of getting serious negotiations for a trade deal initiated in the not-too-distant future.

While the Trump administration has seemingly been willing to cede some key ground when it comes to some of the U.S.’s competitive advantages in AI, it’s hoping that the move will help secure longer-term access to China’s rare earth mineral supply. Adversarial relations between the U.S. and China have increased the strategic importance of domestic mineral sourcing operations and paved the way for TMC stock to see huge gains this year. With some recent steps toward trade negotiations between the U.S. and China, TMC’s big rally has taken a bit of a breather.

TMC’s share price has continued to slide in August

As of this writing, TMC stock is down roughly 10% in August’s trading. While there haven’t been any major, negative business-specific catalysts for the company, investors have continued to take profits and reduce exposure to the stock in light of uncertain trade dynamics. Despite some recent sell-offs, the company’s share price is still up roughly 378% year to date as of this writing.

TMC now has a market capitalization of roughly $1.9 billion and is still in a pre-revenue state. While the company will still need to secure key permitting and other regulatory approvals in order to kick off its commercial seabed mining operations, there seems to be a good chance that increased government support for domestic rare earth mining projects will help facilitate TMC’s operational launch and scaling.

Betting on that outcome is still a risky proposition, but an executive order signed by President Trump to expedite the review of permitting applications for seabed-mining bodes well for the company. While a trade deal with China could help alleviate near-term concerns about rare earth mineral sourcing, increasing domestic production capabilities will likely continue to be a priority along economic and national security lines.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

TMC The Metals Company (TMC 1.99%) has been one of the market’s most explosive stocks across 2025’s trading. Even after a recent pullback, the company’s share price has surged roughly 368% year to date as of this writing.

TMC’s huge gains have been powered by expectations that regulatory shifts and other political dynamics will fast-track the seabed mining specialist’s path to operational deployment and rapid growth. If you’re wondering whether the mining company has what it takes to turn a $10,000 investment into $50,000 or more over the next five years, read on for a look at key dynamics that could shape the stock’s performance over that time frame.

Could TMC 5x over the next five years?

TMC’s business is still in a pre-revenue state, and its stock is a risky investment candidate. On the other hand, some key dynamics have been moving in the company’s favor — and there are feasible outcomes that could result in its share price surging far above current levels.

President Donald Trump signed an executive order in April to expedite permitting applications for seabed mining operations, and TMC responded by submitting several applications for regulatory approvals. Seabed mining capabilities could be crucial to helping to improve the United States’ ability to source rare earth minerals domestically. Along those lines, the recent pullback for TMC stock has actually been driven by signs suggesting that the Trump administration could reach a trade agreement with China that secures future access to Chinese minerals.

With a market capitalization of roughly $1.9 billion, TMC is still a relatively small company. Its stock is also a highly speculative investment play. While the company’s shares come with a very high level of investment risk, I think there’s actually a very good chance that its valuation will bound well above current levels. Whether or not the company’s stock can deliver 5x returns over the next five years remains to be seen, but geopolitical dynamics and the importance of rare earth mineral sourcing suggest the potential is there even if that outcome is far from a safe bet.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.