Momentus (MNTS) Plummets 18%: Warrant Drama, Spark’s Bearish Call, and a Sector in Turmoil

Summary
• Momentus (MNTS) crashes 18.32% to $1.56, erasing $3.6M in market cap
• $2.7M warrant exercise triggers 4.86M inducement shares, sparking dilution fears
• Spark AI flags 'Underperform' as losses widen and technicals turn bearish

Today’s carnage in MNTS reflects a perfect storm of capital flight, governance risks, and sector-wide jitters. The stock’s freefall from $1.78 to $1.51 underscores investor panic over the warrant inducement deal and deteriorating fundamentals. With the Aerospace & Defense sector reeling and no options liquidity to anchor sentiment, the path forward is fraught with volatility.

Warrant Inducement and Spark’s Bearish Call Fuel Flight to Safety
The 18.32% plunge in MNTS stems from a $2.7M warrant exercise that triggered 4.86M inducement shares, effectively doubling the float. This dilutive move, coupled with Spark AI’s ‘Underperform’ rating citing ‘high-risk profile’ and ‘no dividend yield,’ has accelerated selling. The technicals—RSI at 87.5 (overbought), MACD histogram at 0.053 (bearish divergence), and a 200-day MA at $2.57 (far above current price)—confirm a breakdown. Investors are fleeing as the company’s $10.9M market cap shrinks and liquidity dries up.

Aerospace & Defense Sector Reels as Lockheed Martin (LMT) Slides 1.36%
The Aerospace & Defense sector is under pressure, with Lockheed Martin (LMT) down 1.36% and peers like Redwire (RDW) and Mercury Systems (MRCY) trading lower. MNTS’s collapse mirrors broader industry jitters over defense budget uncertainties and geopolitical risks. However, MNTS’s 18.32% drop far outpaces sector moves, highlighting its unique challenges: a 52W low of $1.03, -77.25% YTD return, and a PE ratio of -0.44 (vs. sector averages of 25–30).

Technical Divergence and ETFs Signal Short-Term Caution
• 200-day MA: $2.572 (far above current price)
• RSI: 87.5 (overbought, bearish divergence)
• MACD: 0.014 (bullish) vs. Signal Line -0.038 (bearish)
• Bollinger Bands: Price near upper band ($1.56), suggesting potential reversal

The technicals paint a mixed picture: overbought RSI and bearish MACD divergence signal exhaustion, while the 200-day MA remains a critical resistance. Short-term traders should watch the $1.22 (middle BB) and $1.15 (30D support) levels. No leveraged ETFs are available, but the sector’s 1.36% drop in LMT suggests caution. With no options liquidity, the focus remains on technical triggers and capital preservation.

Backtest Momentus Stock Performance
The backtest of MNTS's performance after an intraday plunge of at least -18% shows mixed results. While the 3-Day win rate is 41.36%, the 10-Day win rate is 39.73%, and the 30-Day win rate is 43.13%, indicating a higher probability of positive returns in the short term, the actual returns over these periods are negative, with -1.90% over 3 days, -4.10% over 10 days, and -5.40% over 30 days. The maximum return during the backtest period was only -0.63%, which occurred on day 0, suggesting that the strategy yielded minimal positive returns and failed to capitalize on the opportunity.

MNTS at Inflection Point: Watch $1.15 Support and Sector Sentiment
The 18.32% drop in MNTS has created a critical juncture. While the $1.15 support level (30D support) offers a potential floor, the inducement warrants and Spark’s bearish call could drive further selling. Sector leaders like Lockheed Martin (LMT) at -1.36% underscore broader risks. Investors should monitor the $1.22 (middle BB) and $1.15 levels for directional clues. If $1.15 breaks, the 52W low of $1.03 becomes the next target. Aggressive short-sellers may consider cashing in on the breakdown, but liquidity constraints and sector weakness demand caution.