Meta Materials Stock Up 30% in September – Time to Buy MMAT Stock?

The price of Meta Materials stock has jumped nearly 30% so far in September, less than a month after the company published its latest quarterly report on which it reported a significant jump in revenues compared to the previous year although net losses accelerated significantly.

During the three months ended on 30 June, Meta Materials Inc. saw its top-line results surge 196% to $624,320 while operating losses landed at $4.45 million compared to $2.46 million the firm reported during the same period a year ago.

So far this morning, shares are jumping another 5% making this the eighth positive session for MMAT in the past ten.

Could this uptrend continue? What role are retail traders playing in this latest surge in the stock price? Join me in the following article as I take a closer look at the factors that are driving this surge in MMAT stock.

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Meta Materials Stock – Technical Analysis

The past six sessions have been quite volatile for Meta Materials stock as volumes have surged above the 10-day average in all of them including a pronounced uptick that took place on 30 August.

Back then, the share price rose as much as 29.5% at $5.8 per share at some point during the session to then settled much lower at $4.42 for a 7% daily gain. Over 80 million shares exchanged hands on that day – a number that exceeded the 10-day average by nearly 5 times.

This latest positive momentum has effectively broken the descending triangle formation shown in the chart above and may be signaling a full-blown trend reversal for MMAT stock amid the increased participation of retail traders who may have pulled another short squeeze on this small company.

According to data from Market Beat, short interest for Meta Materials stands at 7.65 million shares or 3.2% of the stock’s total float – a relatively low figure that may not be enough to sustain a prolonged uptick in MMAT.

Moving forward, the stock may continue to be significantly volatile ahead of the expiration of its 09/07 weekly options and especially so once that date approaches. If bulls manage to keep pushing the price higher near this date, chances are that the stock may experience further pronounced upticks as stock brokers will be forced to hedge their exposure amid an extremely low put/call ratio that is currently sitting at 0.13.

Comment volume on the stock has remained relatively high within the popular Reddit messaging board Wall Street Bets, with total comments about MMAT currently accounting for 5% of the total as of this morning.

As a result of this continuous elevated interest on the stock, chances are that further purchases of out-of-the-money call options on the stock may push its price higher a few days before the expiration of the next options contract.

Meta Materials Stock – Fundamental Analysis

Meta Material is a Texas-based company dedicated to developing smart materials for multiple up-and-coming industries. The firm specializes in holography, lithography, and wireless sensing technology.

Meta Materials can be considered a pre-revenue company, with sales of the firm remaining within $0 and $2 million in the past four years at least. Meanwhile, its negative EBITDA has been progressively deteriorating from $5.1 million to $7.1 million during that same period as the company continues to invest in research and development (R&D) for its upcoming products and solutions.

By the end of the second quarter of 2021, Meta Materials had assets of $460.9 million including $154.6 million in cash and $217.6 million in goodwill. The company has nearly no long-term debt but held $77.9 million in preferred stock liabilities due this year.

At its current market capitalization of $1.6 billion, the company is trading at nearly 11 times its tangible book value by the end of Q2 2021.

Even though its intellectual property may justify a portion of this valuation, the fact that the company has not generated revenues yet makes its current market capitalization highly sensitive to negative developments concerning its ability to develop products and solutions that can be commercialized.

Moreover, the complexity of the transactions that the company has engaged in to be shaped up to its current form makes it difficult to understand what the management goal is and whether the company has the capabilities to achieve its mission considering that it has no positive track record to show for.

All things considered, despite the positive upside that this stock may continue to experience amid the successful execution of complex trading strategies, this stock is arguably a good pick for the lay investor from a fundamental perspective as it has no revenues to show for while its market capitalization has been widely distorted by these latest events.

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