Another unstable meme stock may be on its way out the door. Meta Materials (NASDAQ:MMAT) has been struggling for well over a year and hasn’t reported a positive catalyst in months. Granted, the functional materials company did manage to regain Nasdaq compliance in February 2024. However, that hasn’t done much for MMAT stock since. Today, shares are sinking quickly on news that Meta Materials is reducing its staff by 80% over the coming weeks, per a company statement released last week.
Naturally, news of the Meta Materials layoffs is calling the company’s future into question, as these job cuts will leave it with a concerningly small staff. What’s more, for a company that has been on the rocks for a while, the development is especially worrying news.
What to Know About the Meta Materials Layoffs
If this company’s name sounds familiar to you, it’s probably not for good reasons. Meta Materials made headlines late in 2022 when the the Financial Industry Regulatory Authority (FINRA) halted trading of its preferred shares ahead of a planned spinoff. Since then, shares have mostly trended downward amid unsubstantiated allegations of “naked shorting.”
So far, Meta Materials has managed to hang in there. But now the Meta Materials layoffs may mark the beginning of the end for this troubled meme stock. As TipRanks reports:
“[Meta Materials] has announced a significant reduction of its workforce by 80% due to liquidity challenges and difficulties in obtaining additional financing. The company is actively exploring strategic options which may include asset sales, securing further financing, or even a potential sale of the business itself. Amidst financial struggles, Meta Materials Inc. faces the risk of closing down facilities or having to file for bankruptcy if they cannot secure the necessary funds.”
Given how much MMAT stock has struggled lately, bankruptcy and facility closures have always seemed like a possibility. With Meta now reducing its staff by such a large amount, though, these dismal scenarios appear much more likely.
According to data from Macrotrends, Meta ended 2023 with 103 employees. Based on that figure, 80% of its workforce equates to roughly 82 workers, meaning the company could be left with a staff of just 21 following the layoffs.
It’s hard to imagine how Meta could start growing with such a limited workforce. As such, it seems like the firm may be preparing to close up shop. Accordingly, the layoffs may compel investors still holding MMAT stock to sell while they still can. Investors who do not sell may also soon be reminded why Meta Materials should serve as a cautionary tale.
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On the date of publication, Samuel O’Brient did not hold (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.
