Meta Materials (MMAT)

I like to get ideas for articles from the trending tickers list. MMAT has been at or near the top of the list for some time so I thought I'd check them out. Finally I get to write about an exciting company!

They use AI-driven software to design innovative materials and surfaces in many different spaces including consumer electronics, 5G communications, health and wellness, aerospace, automotive, and clean energy. As you can imagine, this type of development is much faster and cheaper than traditional methods. They use holography, lithography, wireless sensing, ARfusion®, and PLASMAfusion® to produce their various prototypes. They partner with global companies to bring these products to market. It is beyond the scope of this article to discuss the technology in much detail. If you are interested in learning more about Meta Materials' processes, I encourage you to visit their website at https://metamaterial.com/ Pretty cool stuff.

MMAT, the stock, has an interesting history. In late June of 2021 they did a reverse merger with Torchlight Energy Resources in order to access the US capital markets. Torchlight itself had been bought out by a company called Pole Perfect, which specialized in pole dancing studios. That's not a typo.

Anyway, it's a completely different company now. But the stock has not done well at all. It has gone nowhere but down since the reverse merger with Torchlight back in 2021.

Granted the broader market has been weak for a lot of that time period, but that doesn't explain everything. So what does?

I would argue that the company's financials haven't helped. Here's a look at their last four quarterly income statements.

They have been losing money at a pretty good clip as they presumably have been developing materials and surfaces.

I would imagine they'll have to continue to raise money to fund operations until they can ramp up sales. Their revenue is just too low to make any kind of difference.

The one thing that brings a ray of hope for current investors at the moment is that investors' risk appetite seems to be returning after a pretty rough year for stocks. And if you take a look at their stock chart again you can see that we've just gotten the golden cross (50-day SMA crossing over the 200-day SMA). This is not a slam dunk indicator by any means but a lot of people look at it favorably so we'll see.

Let's take a look at the borrow availability and fee rate very quickly. As you can see in the chart below, the fee rate has been lagging the stock price by a week or two. This is somewhat typical behavior as the supply and demand of shortable stock ebbs and flows.

It's interesting that the fee rate has gotten so high though recently. 300% is nothing to sneeze at.