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Why Meta Materials Stock Soared on Monday

By Brett Schafer – Aug 30, 2021 at 12:05PM

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Investors attempted a short squeeze on the smart-materials company.

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.

A rocket ship taking flight.

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.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Meta Materials Inc.. Stock Quote
Meta Materials Inc..
$1.83 (-3.68%) $0.07

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