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Metalla Royalty & Streaming: A Look At The Valuation After The Drop

Taylor Dart profile picture
Taylor Dart


  • Metalla Royalty & Streaming is one of the worst-performing miners in FY2021, down more than 33% year-to-date.
  • This is due to the fact that the stock came into the year sporting a tech-bubble-like valuation, with the stock briefly trading above 140x sales.
  • Recent developments in the company's portfolio and its significant organic growth pipeline make Metalla a name worth watching going forward.
  • However, while we could get a bounce short-term after several weeks down in a row, I still don't see the stock as investable at roughly 100x trailing revenue.

It's been a brutal start to the year for the Gold Juniors Index (GDXJ), and even past high-flyers haven't been spared, with Metalla Royalty & Streaming (NYSE:MTA) sliding more than 30% in just two months. This significant underperformance to start the year is likely because the stock entered 2021 with a tech-bubble-like valuation, briefly trading above 140x sales. While the recent correction has helped cool off this valuation a little, Metalla is still trading at a market cap of roughly C$470~ million with less than C$10 million in trailing-twelve-month revenue. After 8 weeks down in a row, a bounce is certainly possible, but I don't see any safety margin for investing at current levels.

(Source: Company Presentation)

Just over two months ago, I wrote on Metalla Royalty & Streaming, warning that the stock was trading at an insane valuation, regardless of the busy year the company had in terms of completed transactions. This is because the stock was sitting at nearly 150x sales vs. a median price to sales ratio of 15.14 for its peers in the royalty/streaming group. This revenue multiple not only dwarfed its peer group, but it dwarfed many of the priciest revenue multiples in the tech sector, with tech stocks rarely trading at more than 50x sales, let alone 150x sales. Not surprisingly, the stock has come under some pressure after being priced for near perfection in a sector that's clearly out of favor. Before digging into the updated valuation, let's take a look at recent developments in Metalla's royalty/streaming portfolio:

(Source: YCharts.com, Author's Chart)

Metalla had a very busy year in 2020, ending the year with 62 total assets, with an industry-leading 20 transactions since its inception. This compares favorably to Franco Nevada Gold (FNV) with 15 transactions, an average of closer to 10 transactions

This article was written by

Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, my top-12 miner rankings, GDX buy/sell signals, new positions I am entering/exiting, plus proprietary sentiment indicators updated weekly for gold miners in my newsletter below. Returns Link: https://imgur.com/a/sreY6SzSubscription LinksMonthly: https://buy.stripe.com/7sI14d4b92vFdUc15cAnnual: https://buy.stripe.com/4gw28h0YXeen7vObJP - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD, KL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

Derratar profile picture
Nice writeup, lots of deals 8mth to 24mth numbers should be impressive

Microcap Viper on your radar

Love a sale
I find the 'early stage' streamers like VC companies. They're a lot of hype and aggressive in what they do (acquiring mining assets that are mostly mid/long term from production. These assets are relatively cheap and create an inventory of potential assets.  
As in the case of MTA, it worked and their valuation has grown dramatically. But, now (as evidenced by Taylor) they are overvalued vs their peers. Now, the y need to start showing producing assets (GEOs).  
I contrast MTA to SAND, which is down over 40% since last July. A key reason is that it didn't do any deals in 2020. (1. They recognize they hurt themselves, but, 2, their philosophy is not to overpay. )The market doesn't like seeing the lack of new deals altho SAND has a nice inventory of non-producing assets in various stages of development. Hod Maden is the game changer, almost doubling GEOs, but also high risk.
That being said, compare the valuation metrics between MTA and SAND. You might not like SAND, but they're a lot cheaper, with equal of better upside.
@coloradan SAND overpays for their royalties...that’s why they are underperforming. MTA has most likely finished its consolidation and will continue to blow SAND out of the water until they either get taken out or merge. Good luck with that ;)
Muskiebear63 profile picture
I think a lot of the run-up had to do with getting included in the GDXJ ETF. Maverix Metals (MMX) could be in this position soon. Although Maverix growth in 2021 looks to be flat vs previous year.
fazsha profile picture
This stock has done quite well in 2020 with EB Tucker's enviable promotional skills, but I steer clear of this speculative stock.
derby dude profile picture
@fazsha Thank you for your comment. I did not know about EB Tucker promoting MTA. I learn a lot from you! Did Tucker recommend selling which resulted in the recent downturn? Or are investors realizing the high price to revenue is overpaying for the future growth? Thanks to Taylor I learned about MTA and bought it because at the time it had a high concentration of silver for a royalty company and looked good. Even with the downturn, I am still up 100%. May sell it and invest more in other silver stocks on dips like Discovery and GoGold. I am very bullish on silver, even more so than gold.
fazsha profile picture
@derby dude It's very hard to use some measures on royalties and streamers like Price/Revenue, because the operating profit margins are so much higher on such companies. Pierre Lassonde said to have a great royalty company your first royalty must be outstanding, and when I look at MTA's royalties nothing jumps out at me, and it's going to take a while to get permitted and built, so I feel like I'm buying a pig in a poke. However, some of the companies that MTA is involved with, Karora and Minera Andes, look interesting, Karora now, Minera Andes maybe in 9 months.
fazsha profile picture
@derby dude I own Discovery. GoGold is interesting, as its main shareholders are Fred George and Brad Langille who used to run Gammon Gold. Under their leadership, the market capitalization of Gammon Gold grew from $2 million to $2.4 billion in just five years.
Thanks for the great article. It would be beneficial to see a similar type of analysis for Nova Royalties (NOVRF).
Thanks for your excellent and impartial analyses with well-selected peer group comparisons.
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