Should You Invest $100 in The Metals Company Right Now?
Key Points
The Metals Company is aiming to mine polymetallic nodules from the Pacific Ocean.
The Canadian company doesn't have regulatory approval to operate commercially.
Cash burn is real, and until it can generate revenue from nodules, dilution is a risk.
- 10 stocks we like better than TMC The Metals Company ›
The Metals Company (NASDAQ: TMC) isn't your average mining stock. Instead of picks and shovels, it operates robotic vacuums. And instead of mining for ore in the earth, this start-up is aiming to harvest polymetallic nodules from the seabed of the Pacific Ocean.
The amount of battery metals in these nodules is astonishing, enough for about 280 million electric vehicles (EV), nearly equivalent to the U.S. passenger car fleet (about 300 million in 2025).
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An investment of $100 in a company with that much potential may seem a no-brainer. But brains we must have, for the company isn't exactly a sure path to millionaire status, nor will every investor be content with the rocky road this stock may traverse. So, let's have a closer look.
A plummet to riches, or a deep-sea mirage?
The first thing to know about TMC is that it's currently embroiled in a regulatory impasse that needs to end with a commercial license if it is to survive.
The larger problem, however, is that the regulatory process is still being written. Deep-sea mining is nascent and untested. As a result, the International Seabed Authority (ISA), which governs international waters, hasn't decided on a rulebook by which to approve commercial operations for a company like TMC.
One thorny issue is whether seabed mining will cause irreparable damage to marine ecosystems. Deep-sea life is still relatively unknown, and marine biologists want to be cautious not to destroy what we have yet to even discover.
Image source: The Metals Company.
The impasse has inspired TMC to pursue other routes to commercialization, such as through the U.S. Since the U.S. is not a member of the ISA, TMC could technically use its obscure mining laws to mine nodules legally, though doing so could cause a much larger political fiasco. In the meantime, TMC is living off about $116 million in cash and equivalents.
With the stock's roughly $2.6 billion market valuation, and zero commercial revenue, I'd approach it cautiously. A $100 investment is best reserved for those investors who can part ways with that money.
Should you buy stock in TMC The Metals Company right now?
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Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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