Canada-based Meta Materials (NASDAQ:MMAT) stock provides a great example of Occam’s razor, which goes back nearly 1,000 years to an English Franciscan friar, William of Ockham.

Basically, the concept is that entities should not be multiplied beyond necessity.

The modern shorthand for this is when a person is presented with a number of possibilities, it’s best for them to choose the one with the fewest assumptions.

While saying “the simplest solution is usually the best,” isn’t technically what he was getting at, it’s pretty darn close to the real meaning.

For example, we can see MMAT stock for what it is, or we can assume a lot of things that may happen. Occam’s razor tells us to stick with what is known and avoid spinning out in assumptions.

A Closer Look at MMAT Stock

In this crazy market we’re in – the longest bull market without a significant correction – it’s easy to understand why investors are fascinated with new and different companies, technologies, and stocks.

But most of these “investors” are kids that date my 17-year-old daughter or drop their spare change in fractional shares. They talk about owning Tesla (NASDAQ:TSLA) while driving their family car.

It’s crazy.

Generally what these small stocks like MMAT have in common is that they trade at low volumes and questionable valuations. This means institutional traders have little interest in them and they’re open game for daytrader wannabes and market neophytes.

This new level of investors doesn’t remember the 2000 dot-com bubble or even the 2008 reckoning. That makes these wild rides “fun”.

Hey, in these times, with everyone’s foot off the brakes, the Covid cloud still lingering, why not have a little fun?

Steak or Sizzle?

MMAT stock seems as fun as a bankrupt gaming rental company or a movie theater chain, right? It has an exciting story like the electric vehicle special purpose acquisitions companies (SPACs) that popped up like mushrooms last year.

Here’s the thing. In MMAT’s investor presentation, it says one of its breakthroughs is its speed of development from lab to fabrication.

“META uses AI software to design a library of patterns for different applications, it typically develops new custom solutions within hours vs months,” according to the presentation.

Yet it took the company more than two years to develop its glucose monitor prototype. Assumption 0, facts 1.

From there, assumptions multiply. While MMAT certainly has some very cool ideas, it has a nearly $1 billion market cap, yet only does about $1.5 million in revenue annually.

MMAT’s products are certainly interesting. But there are plenty of first- second- and third-tier defense companies in the U.S. that have similar projects happening, and they’re getting significant funding to pursue them.

The Bottom Line on MMAT Stock

Finally, the reverse merger of Torchlight Energy with MMAT is another odd situation. Why would a natural gas exploration and production company roll into an advanced materials company with no products for energy services?

Natural gas is a huge growth industry now. Why dump this to go into a highly competitive sector with a startup?

Again, there are way too many assumptions to make to have the MMAT story make sense.

The most efficient answer is that MMAT is a meme stock having a moment in the market and nothing more. If it had something worth selling another company would have scooped up the tech. It hasn’t.

Don’t assume anything will change for this one.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, GS Early 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.

GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and heard plenty.