Lynas Rare Earths Ltd (ASX: LYC) shares haven't had the best start to the new year.

In a world where stock markets are roaring, shares in the rare earths miner are down nearly 5% so far in 2025.

Zooming out, Lynas shares closed at a high of $8.09 apiece last November. With the stock down more than 22% from that mark, and slipping further this year, what should investors do? Let's see what the experts think.

Why are Lynas shares struggling?

According to CommSec analysis, the stock appears to be "in a near-term downtrend", meaning that investors likely "see better opportunities elsewhere".

On face value, this might seem odd. Outside of China, Lynas is the world's major rare earths producer.

Rare earth minerals, by the way, include neodymium and praseodymium (NdPr). They are critical for the production of electric vehicles (EVs) and renewable energy.

But despite this dominant position, the company is facing several headwinds.

For starters, rare earth prices are also down from their previous highs. Neodymium itself has fallen over 6% from its September 2024 peak.

Looking back further, they are down 66% below the record levels seen in 2022.

As Investing News Network reports, "muted demand" has hit rare earths prices in the last two years. But "year-on-year increases in mine supply have also capped price growth".

Production setbacks have likely added to the concerns of weary investors holding Lynas shares as well.

Lynas reported NdPr output of 1.29 kilotonnes (kt) in Q2 FY25. According to a note from Goldman Sachs in January, this fell well below the broker's estimates of 1.7kt, likely impacting Lynas shares.

Buying opportunity, or value trap?

Broker sentiment on Lynas shares is mixed, to say the least. According to CommSec, the consensus of analyst estimates rates the stock a hold.

That's made up from seven buys, six holds, and three sell ratings.

As I reported last year, Goldman Sachs, which previously had a buy rating on the stock, downgraded Lynas shares to neutral in October. The broker also cut its FY25 earnings per share (EPS) estimates by 43%.

In its latest note on Lynas from January, Goldman lowered its EPS estimates by a further 6% and 5% over the coming two years, respectively.

Aside from its "balanced" outlook on rare earths, it is neutral on Lynas due to:

…The stock is trading at ~0.9xNAV (A$7.58/sh) and pricing in ~US$70/kg NdPr, slightly below in-line with our long run US$75/kg price forecast, and vs. spot at ~US$55/kg…

…Lynas' 2025 target (12ktpa NdPr) is likely delivered by 2028 but could be upsized to >12ktpa NdPr…based on the increased Mt Weld resource, possible third-party feed, and ongoing supportive global government policy.

The broker rates Lynas shares a hold with a price target of $7.40 per share, slightly below the estimated net asset value (NAV) of $7.58 per share.

What should investors do now?

With Lynas shares trading well below their 2024 highs, brokers are split on what to do next. Much of the debate hinges on what the market for rare earths does this year.

Weaker NdPr price, production setbacks, and a shrinking cash buffer are all headwinds for the company. But these could dissolve if rare earths prices soar again. Only time will tell.

Just remember, long-term thinking is crucial regardless of the opportunity at hand.