It breaks my heart to say this. I really like what Meta Materials (NASDAQ:MMAT) is doing in the field of lithium battery materials. This company has tremendous potential as a functional materials innovator. Yet, MMAT stock is still most likely destined to get kicked off of the Nasdaq exchange.
I’ve been covering Meta Materials for a while now, and I’m still rooting for the company to succeed. I still remember the feelings of hope and excitement when Meta Materials President and CEO George Palikaras declared two years ago that his company was “the first NASDAQ-listed metamaterials company, joining the world’s premier exchange for technology companies.”
Fast-forward to 2023, and the excitement has devolved into disappointment. Meta Materials may have the vision and the drive to succeed, but unfortunately, the company’s financials are flashing a major warning signal to investors.
Meta Materials Develops Its Lithium Battery Patent Portfolio
Before delving into the Meta Materials’ problems, I’d like to start off with some positive news. It appears that the company is making strides in developing its patent portfolio, especially in the area of lithium battery materials.
Impressively, Meta Materials now has more than 500 active patent documents. “This is an 86% increase compared to 269 active patent documents in 74 families one year ago,” observed Shann Kerner, Meta Materials’ chief intellectual property officer.
Furthermore, Meta Materials revealed “another issued U.S. patent directed to lithium batteries that utilize novel separators.” The company is developing materials to help prevent battery fires, “make batteries safer and more efficient” and address other issues related to lithium batteries.
MMAT Stock Isn’t Likely to Stay on the Nasdaq Exchange
It might feel good to invest in a business that’s working diligently to make lithium batteries safer. However, it won’t feel very good if MMAT stock gets booted from the Nasdaq exchange.
Bear in mind, Meta Materials is in poor financial condition. In 2022’s fourth quarter, the company generated $1.4 million in total revenue. During that same time, Meta Materials’ operating expenses totaled $24.8 million.
Moreover, Meta Materials incurred a $79.1 million net earnings loss in fiscal 2022. Surely, you don’t have to be an accountant to see why this is a problem. Meta Materials even warned that it has “identified factors that raise substantial doubt about the Company’s ability to continue to operate as a going concern.”
By the company’s own admission, Meta Materials expects that it will have to “implement expense reduction measures” and “immediately raise additional capital.” Plus, Meta Materials expressed doubts concerning its ability “to achieve compliance with” the Nasdaq exchange’s listing requirements.
Presumably, these requirements include maintaining a share price of at least $1. As it turns out, MMAT stock has stayed below $1 since early February.
Maintain Low Expectations With MMAT Stock
Hardly anyone (except maybe some short sellers) wants to see Meta Materials fail. The company is a true innovator in functional materials, including lithium battery components.
This doesn’t mean it’s wise to invest in Meta Materials, though. The best policy in 2023 is to have low expectations for MMAT stock. It will probably get delisted at some point, so it’s definitely not a good idea to invest in Meta Materials now.
On the date of publication, David Moadel 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.