The special purpose acquisition company (SPAC) market has been turbulent this season, a trend that shows no signs of subsiding. Of course, it doesn’t help when a company going public by way of a SPAC merger is coming to market with a history of controversy. For The Metals Company (NASDAQ:TMC), known previously as DeepGreen Metals, that is exactly the case. TMC stock has seen significant volatility since its public debut and this morning’s events indicate that no change is in sight.
What Happened With TMC Stock?
TMC stock began trading on Friday, Sept. 10. It saw a generally good opening day, with share prices moving gradually upward with only slight and periodic downticks. The stock is up 14.5% over the past five days and although it rose by 30% yesterday, today has seen it decline by 2.57% as of this writing.
That said, it is early in the trading day and TMC stock is already rebounding.
What It Means
As noted, this type of early trading volatility is not unusual for a SPAC. For a company such as TMC, it is not surprising at all, given the many investors who pulled out of the deal prior to the merger, leaving the company with sufficiently less cash than it had initially boasted upon valuation.
As SPAC peer Hippo Holdings (NYSE:HIPO) can attest, having early stage investors pull out close to your debut can easily send shares plunging and make future investors question your long-term sustainability and growth potential.
Additionally, those who are hesitant to take a bullish perspective on TMC stock have other cause for concern. While the company boasts a business model that sounds promising — mining ocean minerals that are used in battery production — its sustainability-focused marketing has drawn significant skepticism. Specifically, it has led to accusations of greenwashing, aggressively pushing an environmental narrative to distract from the questionable practices happening, quite literally, below the surface. For companies seeking eco-friendly capital, this type of marketing can be difficult to resist.
What’s Next for TMC Stock?
There’s no denying that this company is operating in a market with plenty of potential. Battery production is a key component of the red-hot electric vehicle market and the elements that go into it have yielded some companies excellent market results.
With that in mind, though, there are plenty of reasons for investors to tread carefully when dealing with TMC stock. The trend of investors withdrawing is worrisome enough, but the company’s questionable environmental practices also raise some questions that leave room for concern.
While this is absolutely a stock worth watching, going long on an investment at such an early stage is still quite risky. TMC has claimed to be a sustainable company but that does not mean that its growth will be.
On the date of publication, Samuel O’Brient 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.