In America, a company like Meta Materials (NASDAQ:MMAT) would be a small group of engineers tucked inside a defense contractor like Lockheed Martin (NYSE:LMT). The patent rights in MMAT stock would be traded like playing cards in Silicon Valley.
In Halifax, Nova Scotia, on the other hand, Meta Materials and MMAT stock is left to play all sorts of faintly smelly stock games to stay in business. The business here is materials research. It’s intellectual property that might have relevance in defense, automotive and medical fields, if Meta can find the right partners.
Sadly, this hasn’t happened. Revenues have collapsed from nearly $1.3 billion in 2018 to just $2.5 million during the first quarter of 2021. It’s the end of the line.
Or is it?
Torchlight Energy was a Plano-based oil and gas company. It was founded in 2007 and went public in 2010.
It was last seen, just before the pandemic hit, making a gas strike in the Orogrande Basin, which runs under West Texas near the Mexican and New Mexico borders. Speculators called its play a “long ball,” a swing for the fences.
Swing and a miss, apparently. Those Meta revenue numbers, dating back to 2018? They’re Torchlight’s.
But Torchlight wants to be in the Meta Materials business. It engineered a merger with the Canadian company, which hasn’t had more than $1.6 million a year in organic revenue. Torchlight now owns 25% of Meta Materials and its CEO, a man named John Brda, has joined it. The oil and gas assets are being sold.
Why is Meta Materials doing this? For $160 million in new cash and a debt-free balance sheet.
According to Meta Materials’ press materials, it’s just about to find strategic partners and markets for its discoveries. One such discovery, which took years to complete, involves a glucose monitoring prototype. Meta stock bounced on the announcement, then fell again once people saw what it was.
Look at Meta’s stock chart. There’s a big bounce in February, to nearly $10, and another coinciding with the merger to nearly $20. Both gains were given up before the ink was even dry on traders’ profits.
The first bump coincided with a Reddit trader pushing a rumor that Meta was working with Tesla (NASDAQ:TSLA). There’s a statement inside the Reddit post from CEO George Palikaras, noting that Tesla had an office in the same building as Meta, in suburban Dartmouth. It’s not a big place.
The second bounce involved the Torchlight deal, which included a 1:2 reverse stock split and a capital raise. That’s where the cash came from.
No One Knows
No one really knows anything about Meta Materials, its processes, its products, or its business prospects. That’s the beauty of it.
This let the stock jump 20% on a press release, stating it had joined an industry affiliate program at Stanford.
Repeated pumps of excitement, followed by repeated dumps of stock, have gotten InvestorPlace writers curious. Chris Tyler probably put it best – this is a cash cow for bears. Mark Hake thinks Meta is worth no more than the value of its cash, 84 cents per share. It’s currently trading at $3.20.
The Bottom Line on MMAT Stock
If you don’t understand what you’re buying, don’t buy it.
It’s an old saying, but true. I can’t tell, from the Meta Materials Web site, what they really have beyond hype and hope. Neither can any small investor.
Yet some keep falling for it. They buy on a post or a press release, they see MMAT stock is going “to the moon,” then the smart guys come in and take their money.
Like I said at the top, if there were anything real here, a corporation or Silicon Valley hotshot would have swooped in and commercialized it by now.
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On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future, now available at the Amazon Kindle store. Write him at firstname.lastname@example.org or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.