Facebook’s (NASDAQ:FB) name change is proving to be a boon for a little-known Canadian company.
After the social network unveiled its new “Meta” brand yesterday, the stock of Meta Materials (NASDAQ:MMAT), a material science company based in sleepy Nova Scotia, Canada, surged more than 25%. The share price remains elevated in pre-market trading and MMAT is one of the “top trending” stocks on Yahoo Finance. Several news outlets are attributing the spiking share price to name confusion and expect it to reverse in short order.
However, this is not the first time that similar company names have led to a sharp rise in stocks.
What Happened With MMAT Stock
Mark Zuckerberg announced on Thursday that his company will now be called Meta. The official corporate name will be Meta Platforms and, beginning Dec. 1, the stock will trade under the new ticker symbol MVRS. The company says its new name reflects its “growing ambitions beyond social media,” and is based on the science-fiction term “metaverse.” For those unfamiliar, this term revers to a vision for working and playing in a virtual world.
The rebrand comes after Frances Haugen, a former Facebook employee turned whistleblower, released company documents. In addition to sparking a series in the Wall Street Journal and several appearances before Congress, the documents show that the company is aware of many of the harms its platforms cause but either doesn’t rectify the issues or struggles to address them.
The expectation is that more documents will come in the next few weeks.
Why It Matters
Facebook shares inched higher in after hours trading following the announcement of the new Meta moniker, and were up about 1% in the premarket at $320 per share. However, MMAT stock spiked more than 25%, sending its share price up to $4.81. Meta Materials is up a further 7% in the premarket.
Similar issues have cropped up in the past. In 2019, the stock of Chinese communications equipment company Zoom Technologies (OTCMKTS:ZTNO) rallied more than 80% when video conference company Zoom Video Communications (NASDAQ:ZM) held its initial public offering (IPO).
Meta Materials is a fairly obscure Canadian company, whose tech is used for things such as “transparently blocking a specific color of light, or invisibly heating a window in a car.” Meta Materials is headquartered in Dartmouth, Nova Scotia. It currently trades as a penny stock on the Nasdaq. However, with the latest rally, the company is now worth just over $1.5 billion.
What’s Next for Meta Materials
While traders may want to get in on the big price moves of companies such as Meta Materials to make a fast buck, be warned that the rallies don’t last long. Shares of Zoom Technologies currently trade for a fraction of a penny on the over-the-counter market in the U.S. And, this isn’t the first time that Meta Materials has been targeted for big gains followed by a big crash in its stock price.
Treated as a meme stock this spring, MMAT shares rose 58% on June 21 to an all-time high of $21.76. Even with yesterday’s after-market increase, MMAT stock is still 69% below its close on June 21.
Facebook shares, in contrast, remain up 18% on the year at $320, although they have been hurt over the past month by all the negative media coverage resulting from the whistleblower accusations.
On the date of publication, Joel Baglole held a long positions in FB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.