What happened
Shares of Meta Materials (MMAT -3.68%) jumped on Monday with no news from the company. The move likely came because of an attempted short squeeze from retail investors. The stock was up as much as 40.2% on Monday and currently is up 17.2% as of 11:37 a.m. EDT.
So what
Meta Materials is an early-stage company with a wide focus on building advanced materials to help companies invent breakthrough technologies. It went public through a special purpose acquisition company (SPAC) in June and is down over 40% since, even with the jump in price this morning. In its latest quarterly results, which were announced on Aug. 12, sales grew 197% year over year to $624,000. It lost $5.6 million in cash flow from operations in the period.
Image source: Getty Images.
With no news this morning, Meta Materials stock likely went up because of its popularity among retail investors. The stock has a decent amount of short interest, reported at around 7% of shares outstanding, which could have been the catalyst for the big jump in price this morning. When short-sellers cover their positions, they buy back the shares that were lent to them, which can drive up a stock price rapidly if the demand from buyers increases.
Now what
Even though it is interesting and fun to watch a stock jump so wildly, Meta Materials is very risky to invest in. With a market cap of over $1 billion and less than $1 million in quarterly revenue, its valuation is off-the-charts expensive. Unless you have a high risk tolerance, it is best to stay far away from the stock at the moment.
