MagneGas Corporation (NASDAQ:MNGA): Here's What The Latest News Means

MagneGas Corporation (NASDAQ:MNGA) picked up a bump in valuation mid week, with the company announcing a new production input that will reportedly have a pretty dramatic impact on product output and cost input. The company ran from $1.86 at the end of play on Tuesday to intraday highs of more than $2.54 mid session Wednesday. Subsequent to highs, however, MagneGas gave a fair chunk of this run back to close out the session at $2.20, and it's opened in and around the $2.05 mark on Thursday.Here is a look at what the latest management meetings, and where it fits into our thesis on this company as a whole.For those new to MagneGas, it is a clean energy company based out of Florida. Basically, the company has created a type of gas that can be produced from renewables and liquid wastes, and that can serve as an alternative to natural gas in a variety of settings, as well as provide a cleaner alternative to the current fuel used in metal cutting.The most recent announcement details the fact that MagneGas has transitioned to a new renewable feedstock. A feedstock is the raw material that goes into the production of an industrial process; in this instance, the production of MagneGas. Reportedly, the new feedstock (for which the company has a patent application pending that it expects will pick up a patent grant) results in approximately a 60% increase in fuel output per minute while yielding approximately a 49% reduction in fuel production cost.That's a dramatic change in both input and output; one that could really (and should really) have an equally dramatic impact on various company metrics.The ability to speed up production while reducing costs by almost 50% is important in two distinct ways for the company. First, because it produces and sells its own stock of MagneGas. Second, because it also sells the raw material for gasification, which is the conversion of said raw material into MagneGas, to distributors and gas producers. As such, not only is it reducing its own operating expenses considerably, but it is also able to offer a product to the aforementioned distributors and gas producers that can help reduce their respective operating costs, making a sales team's pitch to these entities far more attractive.So why has the company given back the majority of the gains from the post announcement session?Well, there are certain capital structure concerns at play here and these are putting pressure on the company's ability to appreciate in value. Earlier this month, a reverse split and a bridge loan translated into some dilution, and shareholders have for a long time been relatively unhappy as to how management uses shareholder capital to meet operational costs without putting it to use as expansion capital. There's no problem raising cash to expand, but when it simply gets absorbed as a salary paying input then that's when shareholders become disgruntled.With that said, management has taken steps of late to reduce operating costs outside of the saved input costs associated with the feedstock development, with payroll costs down considerably and research and development costs trimmed. This, for us, highlights a potential for expansion in value going forward. It is only a potential right now, and it relies on management pushing for top line expansion based on the latest announcement and maintaining strict control over operational expenses while still pushing for fresh revenues.If it's able to do this, then there is no reason why the company can't appreciate in value long-term. This is a sizable market, and one that is highly competitive from a cost perspective. MagneGas' technology can reduce costs and so there's no reason why the company can't leverage this to expand; no reason, that is, as long as management performs on par with shareholders' expectations.We will be updating our subscribers as soon as we know more. For the latest updates on MNGA sign up below!Disclosure: We have no position in MNGA and have not been compensated for this article.