AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Meta materials stock news11/7/2023 ![]() At $6.69 per share, Next Bridge would have a market cap of $1.1 billion, which would be an exceptionally high valuation for a company with no current production, negative free cash flow and no evidence that it can generate competitive well-level returns. I am of the opinion that MMTLP's current price (of $6.69 per share) far exceeds the current intrinsic value of the oil and gas assets that Next Bridge will own. However that note also points out that MMTLP "may rise significantly but not be representative of the value of the underlying shares" of Next Bridge common stock. This language may itself have triggered the rise in MMTLP's price. There has been a lot of attention paid to the language in the latest S-1/A filing noting the potential for a short squeeze. One MMTLP (Series A Preferred share) will be exchanged into one Next Bridge common share once the spinoff is completed. It appears that a combination of a short squeeze and momentum trading has propelled the placeholder MMTLP over 300% in a matter of days. ![]() Next Bridge Hydrocarbons is getting closer to being spun off from Meta. The $3.33 million per month repayment schedule in that case would basically cover Meta's projected cash burn (at projected early 2023 levels), which would give it another six months of runway (and perhaps more if it can reduce its cash burn). The debt would need to be repaid in six equal monthly installments (starting in April 2023) in the scenario that Next Bridge raises that capital. ![]() However, if Next Bridge raises at least $30 million in capital (through equity and/or debt), the debt maturity will be extended to Septem(for $15 million) and Octo(for $5 million). It owes $20 million to Meta, with a maturity date of Macurrently. Next Bridge will start out as a private company, but I expect it to be publicly traded in the near future. Potential sources of funding include its warrants for 37 million shares at an exercise price of $1.75 per share (first exercisable at the end of 2022) as well as the potential repayment of loans by Next Bridge. This still puts it on track for another equity offering in 1H 2023 if it doesn't receive funds from another source. In early 2023, Meta may be able to reduce its rate of cash burn to around $10 million per quarter. I can see it having around $25 million to $30 million in cash burn over the second half of the year, which would result in it ending 2022 with around $25 million to $30 million in cash and short-term investments. ![]() Meta's spending should decline a bit once its oil and gas assets spinoff and once its Halifax production facility is completed. It also spent $9 million on purchases of property, plant and equipment during that period, which would include spending on its Halifax production facility (scheduled to open in November 2022). Meta used $29 million in cash on operating activities in the first half of 2022. This is after it completed its June 2022 equity offering, which resulted in $50 million in gross proceeds ($46 million in net proceeds). Cash Burn And Cash On HandĪt the end of Q2 2022, Meta reported having approximately $55 million in cash and short-term investments. If it doesn't regain compliance by February 21, 2023, it may be allowed a second 180 calendar day period to regain compliance and a reverse split becomes a significant possibility in that case. The recent interest in the company (which appears to have been caused by attention to its oil and gas spinoff) has boosted its share price above $1 and may allow it to regain compliance. Meta has until Febru(180 calendar days) to regain compliance by having the closing bid of its common stock meet or exceed $1.00 per share for at least ten consecutive business days. Meta received notice from Nasdaq in late August that it wasn't in compliance with the $1.00 minimum bid price requirement for continued listing. Assuming that the loan is repaid, Meta should have enough cash to get to late 2023 without requiring more funding, and perhaps a bit more time if it can further reduce its rate of cash burn. The loan repayment would give Meta some additional runway, as I believe that it is otherwise still on track to require another equity raise in 1H 2023. Meta will not have any ownership in Next Bridge Hydrocarbons once it spins out, although if Next Bridge later raises funds of its own, it should be able to pay Meta back the $20 million that it loaned Next Bridge. It appears to be benefiting from the attention being paid to its oil and gas spinoff (Next Bridge Hydrocarbons) as the placeholder shares ( OTCPK:MMTLP ) for that spinoff soar. Meta Materials ( NASDAQ: MMAT) recently saw its stock close above $1 again, potentially staving off listing compliance issues (from its stock being below $1).
0 Comments
Read More
Leave a Reply. |