Why Is Meta Materials (MMAT) Stock Down 25% Today?

A prototype of a nanostructured metamaterial in a lab setting.

Source: Shutterstock

One of today’s biggest decliners is high-performance materials and nanocomposites maker Meta Materials (NASDAQ:MMAT). Currently, MMAT stock is down roughly 25% on some rather interesting news.

Specifically, the Financial Industry Regulatory Authority (FINRA) has issued a revised notice regarding the company’s high-profile spinoff of Next Bridge Hydrocarbons to those holding the company’s Meta Materials Preferred Shares (OTCMKTS:MMTLP). FINRA says the following in the notice:

“MMTLP shareholders with settled positions as of 12/12/22 will receive one (1) share of Next Bridge Hydrocarbons, Inc. for every one (1) share of MMTLP held. Purchases of MMTLP executed after 12/8/22 will not receive the distribution. Will not be quoted Ex. Symbol: MMTLP will be deleted effective 12/13/22.”

What this means is that shareholders who did not take action when we initially reported on this spinoff nearly a week ago will now not be eligible to take part in the spinoff. Significant commentary on Twitter — mostly backlash — has also come as a result of this notice. Much of this has to do with the change in wording from shares of MMLTP being “canceled” to “deleted.” This seemingly innocuous change of wording, as well as a caveat emptor designation, suggests that the spinoff has more risk than investors initially envisioned.

Let’s dive into what to make of this news.

Why Is MMAT Stock Sinking Today?

There’s significant risk implied with any company that’s in or nearing penny stock territory. For Meta Materials, a company that’s already put forward a going concern warning, this is certainly true.

However, the complexity of this spinoff — and the need for FINRA to put forward a revised announcement — is raising eyebrows. This is a company that’s clearly on regulators’ radar and thus could present even more risk than investors were previously aware.

Thus, for those holding MMAT stock or the company’s preferred shares, there’s more to chew on today. And given the overall bearish nature of this market, that’s enough to push many buy-and-hold-investor types away from this stock.

The market currently provides many investors with excellent value in certain sectors. Accordingly, most investors appear to be taking the view that MMAT stock isn’t worth the risk right now.

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On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.