Stock Market

Editor’s Note: This article was updated on July 2, 2021, to replace the old tickers with MMAT.

Suffice it to say that last year, not too many folks had heard of Torchlight Energy Resources. In 2021, however, a flurry of developments has directed traders’ attention to this little company. Where to begin? For one thing, on June 28, the company merged with Metamaterials to form Meta Materials Inc. (NASDAQ:MMAT) stock.

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Second, before the merger, Torchlight had enacted a share split for TRCH stock. That’s a need-to-know event, so we’ll cover the details of that.

Finally, the meme-stock crowd has apparently targeted Torchlight. Obviously, there’s a lot to unpack here. And we also have to decide whether this stock is worthy of a long position now. Are you ready?

A “Split Decision” for TRCH Stock

So, let’s start with a development that’s going to affect all Torchlight investors immediately.

Namely, the company announced that it has implemented a 1-for-2 reverse stock split. So, the share price will double but that shouldn’t materially affect the value of anyone’s currently held shares.

This is fresh news as the reverse split became effective after the market closing on June 25.

Interestingly, the 1-for-2 ratio is the lowest possible ratio that Torchlight could have implemented under the 1-to-20 range that was approved by the shareholders.

I feel that this was a wise decision. Reverse share splits are often a sign of a company in distress, but at least Torchlight opted for the least drastic share-split ratio.

Incidentally, Torchlight also paid a special Series A Preferred Stock dividend on a 1-for-1 basis to its stockholders of record on June 24. That probably won’t affect you, but it’s worth noting anyway.

The Meme Pop-and-Drop

The Reddit crowd can be quite fickle. They can furiously shortsqueeze a stock one week, then abandon it the next week.

Unless you have the inside scoop with r/WallStreetBets influencers, I don’t recommend trying to time these meme-stock rallies.

Otherwise, you might end up buying at the wrong time and holding the bag.

Ill-timed TRCH stock price chasers definitely got punished in June. The stock tripled in price from June 10 to June 21, but then reversed course and plummeted.

I’m not saying that you shouldn’t own shares of Torchlight. It’s just not a good idea for most people to try to time an anticipated meme stock run-up.

Instead, a better strategy would be to pick a lower price point than the current price, and wait for TRCH stock to get there before taking a long position.

A Much Larger Entity

So far, I’ve cited major developments that aren’t necessarily good reasons to invest in Torchlight Energy.

Now, we’ll examine a more foundational company change that might spur informed investors to take a position.

To quote InvestorPlace contributor Chris MacDonald, Torchlight is “set to become a much larger entity in short order.”

I already let the cat out of the bag in the introduction, but MacDonald is referring to the Metamaterial merger. Reportedly, Torchlight has officially combined with Metamaterial.

Notably, as InvestorPlace contributor Robert Lakin explains, “Metamaterial shareholders are expected to own 75% of the combined company, while Torchlight shareholders get 25%.”

And as Torchlight Energy notes in the press release, starting on June 28, Torchlight changed its name to “Meta Materials Inc.” and its common stock is to trade on the Nasdaq Exchange under the ticker symbol MMAT.

If TRCH stock declines to a price point that you feel is acceptable, then the Metamaterial merger could be a valid reason to pick up a few shares.

Metamaterial is a fascinating company in its own right. It provides advanced materials with a broad range of applications, from aerospace and defense to automotive, consumer electronics, medical and energy.

The Bottom Line on MMAT stock

As we’ve discovered, there’s a whole lot going on with Torchlight Energy lately.

We’ve identified several developments that investors should be aware of, plus, one possible reason to buy shares of MMAT stock.

Just be careful not to chase the price if it shoots higher. It’s okay to hold the torch for Torchlight, but don’t end up holding the bag.

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 Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.