Hailing from Canada, Meta Materials (NASDAQ:MMAT) specializes in manufacturing functional materials known, appropriately enough, as metamaterials. This particular company also has a flourishing security segment. Moreover, Meta Materials has demonstrated exceptional revenue growth. Therefore, it’s definitely not too late to buy MMAT stock. Keep an eye on the company’s expenditures, however, and be sure to maintain a reasonably sized share position at all times.
Meta Materials is an unusual company in some respects. There aren’t many publicly traded metamaterials businesses. There’s more to this company than meets the eye, though, as it’s branching out with a business unit that provides anti-counterfeiting services.
That’s intriguing, but sensible investors should also look at Meta Materials’ financial stats, which present good and bad news. Still, even after noting the red flags, you might still want to hold a few MMAT stock shares for the long run.
MMAT Stock Is a Play on Functional Materials and More
So, let’s start from the beginning: What are metamaterials, anyway?
Meta Materials describes them as “a new class of functional materials, designed around unique patterns or structures, which cause them to interact with light and other forms of energy in ways not found in nature.” They have potential and actual use cases in such fields as 5G infrastructure, advanced driver assistance systems, and the internet of things, as well as the medical, aerospace and energy markets.
Don’t pigeonhole Meta Materials as just a functional materials maker, though. As it turns out, the company also has a thriving data-security unit. Impressively, Meta Materials recently received $4.3 million worth of purchase orders for its nano-optic security business.
This particular business unit “provides anti-counterfeiting features for currencies and government documents and authentication for brands.” Among this business’ more notable agreements is one with “a maximum value of US$41.5 million over a period of up to five years with a confidential G10 central bank customer.”
Meta Materials Isn’t Profitable
Hopefully, these purchase orders will contribute significantly to Meta Materials’ bottom line, which is less than ideal. Indeed, even while Meta Materials is demonstrating powerful revenue growth, the company is far from profitable.
During 2022’s second quarter, Meta Materials’ revenue soared 432% year over year (YOY) to $3.32 million. That’s encouraging, but there’s more to the story. Alarmingly, during that same time frame, Meta Materials’ net earnings loss widened from $5.88 million to a whopping $20.98 million.
Digging deeper, we can discern that Meta Materials spent a lot more in multiple categories during Q2 2022 compared to the year-earlier quarter. The company lists these categories as Selling & Marketing, General & Administrative and Research & Development. Meta Materials at least tripled its spending in each of these categories on a YOY basis.
What long-term investors should want to see is a concerted effort from management to reduce expenditures. It’s fine for a business to invest in its future, but there are limits that Meta Materials needs to observe if it is to achieve profitability someday.
So, Is It Too Late to Buy MMAT Stock?
Between its metamaterials business and its security segment, Meta Materials has strong growth potential. It’s a truly unique company and there’s no denying Meta Materials’ revenue growth.
Therefore, it’s not too late to buy MMAT stock as the company should continue to demonstrate its powerful growth trajectory. You’ll definitely want to monitor Meta Materials’ spending habits, though, which need to be kept in check. Consequently, any share position in Meta Materials should be moderately sized.
On the date of publication, David Moadel did not have (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.