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Sometimes, the best policy is to get out of the way when a “falling knife” stock doesn’t stop falling. Such is the case with Meta Materials (NASDAQ:MMAT) stock, a functional materials specialist company that could someday get kicked off of the Nasdaq exchange.
The last thing any investor needs is to buy MMAT stock on the assumption that a bad situation can’t get any worse, only to discover that it actually can.
Meta Materials stock gets a “D” rating instead of an “F” because the company reported encouraging news several months ago. However, it’s been a while since Meta Materials issued any news releases that are worth mentioning here.
There are clear-cut reasons to think twice if you’re considering investing in Meta Materials now.
Good and Bad News About Meta Materials
To be fair and balanced, we’ll start off with the good news about Meta Materials. For what it’s worth, the company filed its 500th patent earlier this year. Meta Materials emphasized that many of those patents pertain to battery materials.
Also, at around the same time, Meta Materials signed an agreement to develop “battery separator materials” with a unnamed battery original equipment manufacturer. That sounds like a positive development, though Meta Materials still hasn’t provided an updated press release disclosing the name of the OEM.
Those mid-March news items didn’t help MMAT stock at all. In fact, the share price has been cut in half since that time. Perhaps that’s because, in April, Meta Materials disclosed its plans to issue (via a public offering) “83,333,334 shares of its common stock and warrants to purchase up to an aggregate of 83,333,334 shares of common stock.”
On top of that, the public offering underwriters were given a “30-day overallotment option” to buy an additional 12,500,000 common stock shares “and/or warrants to purchase up to an additional 12,500,000 shares of common stock.”
As the old saying goes, you can’t print your way to prosperity. Yet, Meta Materials is willing to print up plenty of new shares, even if the current shareholders might not be too happy about that.
MMAT Stock Is Skating on Thin Ice
There are other reasons for prospective investors to be wary of Meta Materials in 2023. First, the company has consistently been unprofitable.
Second, during 2022’s fourth quarter (Meta Materials’ most recently reported quarter), the company generated $1.4 million in total revenue. That might sound fine, but Meta Materials also racked up $24.8 million in operating expenses during that time.
In addition, Meta Materials issued a dreaded “going concern” warning. Along with that, the company expressed “substantial doubt” about its ability to maintain “compliance with NASDAQ continued listing requirements.”
The Nasdaq exchange has sometimes delisted stocks that stay under $1 for an extended period. MMAT stock is currently far below $1. Unfortunately, the aforementioned problems indicate that the shareholders’ pain might not end soon.
Meta Materials Stock Could Easily Lose More Value
It’s possible that Meta Materials might someday enact a reverse share split in order to avoid immediate delisting. That wouldn’t solve the company’s financial problems, however.
Meta Materials’ mega-scale share issuance, along with the words “going concern,” should dissuade cautious traders from buying MMAT stock. It’s fine to keep Meta Materials on your radar, as the company’s financials might improve at some point. Until that happens, though, there’s no convincing reason to commit your investable capital to Meta Materials.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.