Meta Materials (MMAT) stock has seen impressive investor interest in recent weeks.
Share of this manufacturer of high-performance nano-composites and other advanced materials surged to more than $6.50 per share in late-September. However, since then, MMAT stock has settled down to the $5.30 level at the time of writing.
One of the key factors driving this stock higher in recent weeks has been anticipation that MMAT stock could be a short-squeeze play. As retail investors increasingly target various smaller cap stocks, short-squeeze candidates have seen outsized short-term spikes in interest. An options-driven spike in volume in recent weeks provided a nice ride for short-term traders.
For long-term investors, this sort of volatility may not be considered a positive. However, those betting on short-term options have increasingly sought out MMAT as a stock to watch.
Right now, I remain slightly bearish on MMAT stock with respect to the volatility we’ve seen of late. That said, let’s dive into what’s behind this recent rally, and if another rally could materialize. (See Insiders’ Hot Stocks on TipRanks)
Short-Squeeze Potential
Any stock with higher-than-average short interest and borrow fee rates is likely to see interest from retail traders and speculators. Such has been the case with MMAT stock.
Meta Materials has been identified as a company with a strong possibility of an imminent short squeeze in recent weeks. While this interest appears to have waned in early October, the company’s low float and other factors make this a stock to watch.
Meta Materials has repeatedly shown up as a short-squeeze candidate on a number of high-profile sites. This company’s short volume ratio is currently above 52%, with a relatively high borrow fee rate. These factors, combined with a relative low per-share price, made short-term options trading on this stock attractive to investors.
Can another short-squeeze rally materialize? Of course. However, as we’ve seen with other highly-volatile short squeeze plays, the downside potential with these stocks is just as high as the upside.
Accordingly, MMAT stock appears to be an investment for only the most aggressive short-term traders with some idea of how momentum will shape this stock’s return over the near-term. That’s not me.
Other Catalysts Driving Interest in MMAT Stock
Apart from Meta Materials’ short-squeeze potential and retail investor interest, the company has also captured the attention of institutional investors.
The market for metamaterials is expected to touch a massive $10.7 billion by 2030. If this sector can be see the kind of growth expected from the aerospace, IoT, energy and medicine sectors, all bets are off with respect to how fast this market can grow.
Accordingly, Meta Materials hasn’t been sitting on its hands. The company’s looking to capture as much market share as possible. Thus, it’s perhaps unsurprising to investors to see Meta Materials exploring various M&A opportunities.
Meta Materials announced on Oct. 5 that it had completed the acquisition of Nanotech Security Corp. in a deal worth C$90.9 million. This acquisition has the potential to significantly boost Meta Materials’ production process. Nanotech will bring in a wide range of technologies, including 5G, solar energy, carbon capture and more, to Meta Materials’ toolbox.
MMAT has also partnered with the SystemX program of Stanford University. Through this program, businesses can easily sponsor collaborative research at Stanford in a cost-effective way. MMAT wishes to fund research projects conducted by Stanford students and recruit them in the process.
There’s more. The company has announced it will be forming a team of experts as part of its scientific advisory board. The company believes the group of award-winning scientists will successfully spearhead the innovation drive at Meta Materials.
Bottom Line
Although there is much to like about MMAT stock, the company is still quite unprofitable. It has lost over $50 million in the last year, and burned almost $9 million in cash. Investors bullish on this company’s growth have to deal with what look to be rather poor fundamentals currently.
That said, should the company see revenue take off in the years to come, this current stock price could be an attractive entry point.
Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article
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