Despite Years in the Biz, Meta Materials Is an Aspirational Firm

A few weeks ago, Meta Materials (NASDAQ:MMAT) stock generated significant interest although for reasons the company probably didn’t anticipate.

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In late October, social media firm Facebook changed its name to Meta Platforms (NASDAQ:FB). Suddenly, people were bidding up MMAT stock, causing some to wonder if this was a case of mistaken identity.

On some levels, it’s easy to see why observers jumped to that conclusion. Last year when the novel coronavirus was raging, Zoom Video Communications (NASDAQ:ZM) was one of the clear beneficiaries of the work-from-home movement. However, multiple reports came in noting that Zoom Technologies (OTCMKTS:ZTNO), which previously had the ticker ZOOM, shot higher instead.

Even more dumbfounding, this wasn’t the first time retail investors who apparently didn’t perform their due diligence mistook the two Zooms. Back in April 2019, a CNBC report noted that ZTNO – which again previously owned the ZOOM ticker – swung higher. Therefore, the idea that such a circumstance could happen again with MMAT stock wouldn’t be surprising.

By the way, you can look up the ZTNO data yourself. There were indeed two conspicuous spikes so CNBC didn’t make a typo on its publication date.

Still, I have a hard time believing that MMAT stock jumped on the notion that speculators believed they were getting Facebook shares (now Meta Platforms) on the cheap. Honestly, you can’t discount anything in this crazy market gone to the memes. Nevertheless, that’s a bit of a stretch.

FB shares are priced in triple-digit territory, while MMAT stock has been struggling in single-digit territory. Yes, there are the rare arbitrage opportunities but a differential that massive would surely raise alarm.

Instead, many supporters of Meta Materials – which manufactures specialty materials used in multiple high-tech industries – argued they knew exactly what they were doing.

Aspirations of MMAT Stock Entice But Also Dissuade

According to a Barron’s report, retail investors may have been buoyed by a subtle suggestion that Meta Materials may be heading toward a possible partnership with the rebranded Meta Platforms. In a humorous tweet, Meta Materials CEO George Palikaras cordially welcomed Facebook to the metaverse.

For those that may not know, the metaverse represents an online virtual world which encompasses advanced technologies like virtual reality and augmented reality to foster communication between users. Basically, it’s the next evolution of the internet, which has strong implications for social media platforms. But what about MMAT stock?

As it turns out, Meta Materials has “pioneered many of the fundamental physical technologies such as nanomaterials and optics, displays and 5G connectivity,” all of which are relevant to Meta Platforms’ long-term ambitions.

Under this context, you can appreciate why the retail crowd jumped aboard MMAT stock. Better yet, because Meta Materials is researching and developing multiple pertinent applications, MMAT isn’t necessarily tied to the social media giant if the rumored partnership doesn’t materialize.

However, as InvestorPlace contributor Will Ashworth mentioned, management founded Meta in 2011. “It’s taken a decade to get to this point — $11 million in sales, most of it from its recent acquisition — so investors will have to be really patient if they want to see a big payoff down the road.”

Not only that, the company’s Form 10-Q for the third quarter expresses similar reservations under risk factors. I don’t think anybody who analyzes MMAT stock is taking anything away from the underlying innovations, such as in holography and lithography industries.

But as management states, there are no guarantees that companies from those sectors will accept Meta Materials’ products. From the limited operating success, it seems that this has always been the challenge for MMAT stock.

Could This Former SPAC Fly?

Another point that I had forgotten about that Ashworth brought to the table was that Meta Materials entered the public arena via a merger with a special purpose acquisition company. Now, I don’t think it’s fair to judge new listings based off how they entered the market. Still, you should note that SPACs have not been exactly successful relative to their performance against benchmark indices.

Nevertheless, I don’t want to ignore what my other colleagues like David Moadel have mentioned, that undergirding MMAT stock is a business that, if it fires on all cylinders, could be a game changer. Within the various applications that the company is working on are several potential catalysts.

Therefore, if you’re the speculative type, you might want to throw a few bones at MMAT. Otherwise, investors arguably have higher probability platforms with which to put their money.

On the date of publication, Josh Enomoto 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 Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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