MMAT: Why is Meta Materials Stock Up in Recent Trading Sessions?
November 02 2021 - 6:32AM
Finscreener.org
Shares of Canada-based
Meta Materials (NASDAQ:
MMAT) have experienced a
significant uptick in trading volumes in recent sessions. According
to a few media outlets, the popularity of Meta Materials can be
attributed to a case of mistaken identity. As tech giant
Facebook (NASDAQ: FB)
rebranded its parent company to
Meta, MMAT stock
gained 6% last Friday in opening trade after a 26% rise in
after-hours trading a day before.
But MMAT stock was already
trending on social media platform Reddit, where retail traders
orchestrated a short-squeeze on the company. In fact, shares of
Meta Materials rose from $0.56 in November 2020 to a record high of
almost $20 this June. At the time of writing, Meta Materials is
trading at $4.95 per share, valuing the company at a market cap of
$1.38 billion.
In the last year, MMAT stock has
surged by 784% and is up 250% in 2021. But should this tech stock
be part of your portfolio right now?
An overview of Meta Materials
Meta Materials is a smart
materials and photonics company that invents, designs, develops,
and manufactures functional materials and nanocomposites. Its
products include metaAir a laser glare protection eyewear as well
as NANOWEB which is a transparent conductive film. It also offers
holoOPTIX which is a holographic optical component. These products
are used in multiple industries that include aerospace and defense,
automotive, consumer electronics, medical applications, and
energy.
As stated above, the stock has
attracted interest from Reddit’s WallStreetBets and other online
investment communities that target meme stocks with a
high short interest
ratio. While MMAT is
focused on developing advanced materials that have a wide range of
applications and enable technology-based innovations, its currently
swinging wildly due to the short squeeze momentum.
Recent quarterly results
In the second quarter of 2021,
Meta Materials reported revenue of $624,320 which was an increase
of 197% year over year compared to revenue of $210,344 in the
year-ago period. In the first six months of 2021, sales rose by 88%
to $1.22 million compared to $650,683 in the prior-year
period.
MMAT reported a net loss of $0.03
per share or $5.18 million in Q2 compared to a net loss of $0.01
per share or $1.81 million in Q2 of 2020. Its net loss also widened
to $49.33 million in the first six months of 2021, from a loss of
just $3.23 million in the year-ago period.
The net loss included a one-time,
non-cash loss of $40.54 million on financial instruments. The net
cash used in operating activities in the first half of 2021 rose to
$5.6 million from $4.46 million while capital expenditures in the
last two quarters totaled $3.31 million.
MMAT ended Q2 with a cash balance
of $154 million giving it enough room to invest in CAPEX and
support its cash burn at current levels.
Meta Materials acquires Nanotech Security
Corp.
Meta Materials recently closed
the acquisition of Nanotech Security which is involved in the
development of secure and visually memorable nano-optic security
features that provide anti-counterfeiting solutions used in the
government and banknote markets.
The acquisition was valued at $91
million and MMAT’s Chairman of the Board, Ram Ramkumar stated,
“META is focused on growth and extending its leadership position in
commercializing metamaterials. Nanotech’s highly skilled team and
well-established, cost competitive production capability will
complement our technology platform enabling a faster scale up into
existing applications and position the Company for expansion into
new verticals as well.”
The two companies will develop
and manufacture intelligent surfaces and solutions for customers
and is expected to add a new dimension to enterprises part of the
automotive, healthcare, aerospace and consumer electronics
vertical.
The key takeaway
We can see that MMAT generates
negligible revenue and does not command a billion-dollar valuation.
Looking at its Q2 sales, annual revenue run rate will be $2.5
million in the next year, valuing the MMAT stock at a forward price
to sales multiple of a staggering 550x. There is a good chance the
stock will pull back significantly given its sky-high
valuation.
Meta Materials (NASDAQ:MMAT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Meta Materials (NASDAQ:MMAT)
Historical Stock Chart
From Sep 2023 to Sep 2024