MMTec Inc. (NASDAQ: MTC) is a stock that has led to serious disappointment over the years. Recently, it experienced a spike of over 430% which reversed almost instantly, indicating the lack of confidence it holds across the market. This is due to some serious fundamental red flags.
Bad Overall Picture for MMTec
MMTec Inc. has proven to be amongst the most underwhelming performers of the month, as of yet. Investors had long been in a frenzy about the doom-bearing notification by NASDAQ regarding minimum price deficiency. This notification, which was issued in late January of the year, understandably caused concern, as it entailed a potential delisting. By then, however, MTC had fallen from its $16 highs of the previous month to the $5 territory. The news saw the stock’s downfall accelerate, worsening amidst its unsustainable cash burn. By June 2021, the company had cash holdings stood at $15 million. Exactly a year later, it had burned through $2.3 million, yet had only produced $920,000 in revenue. This puts the company in a tough spot, spelling financial uncertainty.
Disappointment After Brief MTC Spike
Things took a turn for MTC, when it finally received positive news from NASDAQ, stating it had met the standard bid requirement. This had come following its 1-for-10 reverse stock split, allowing the company to regain compliance. The news instantly saw the stock shoot up 430% from $1.48 to $7.85. This, however, was far too high for the struggling stock with worsening fundamentals. By the same day, MTC began its plummeting correction closer to a fundamentally sound price. At present, the stock is down to $1.91, which is consistent with its present financial unsustainability. Earlier, the company had announced a $6 million equity financing arrangement, however, that too did little to slow down the fast descent of MTC.
It seems whatever happens regarding the MTC stock, the market is aware of how dire the situation is, and is therefore not reacting with the hype that would normally be expected. MMTec is in clear need for a serious rethinking of its business strategy, and perhaps even its management and business model, if it truly seeks to regain shareholder confidence.