HOLO Stock Is On A Major Rally

MicroCloud Hologram stock has jumped over 200% in a week. Here is what may be fueling this rally and if investors should join in.

Key takeaways

• MicroCloud Hologram Inc. is a Chinese-based company focused on holographic technology.
• In its most recent quarterly report, revenue came in at $24 million.
• It is unclear why the stock is rallying but could be due to manipulation.

Shares of MicroCloud Hologram jumped over 200% over the course of a week for unknown reasons. Investors might consider jumping into this stock, hoping to profit off of the momentum, but could this be a costly financial mistake? Here is a look at MicroCloud Hologram Inc. and the potential reasons the stock is rallying—plus how Q.ai can help.

What is MicroCloud Hologram?

MicroCloud Hologram, formerly known as MC Hologram before its acquisition by Golden Path Acquisition Corporation, is a Chinese-based company focused on researching and developing holographic technology. It features two segments that include holographic solutions and holographic technology services.

The holographic technology services segment includes development of holographic light detection and ranging (LiDAR) solutions, point cloud algorithms architecture designs, LiDAR sensor chip design, and holographic vehicle intelligent vision technology, among other products.

HOLO Financials

The last time MicroCloud Hologram reported a complete set of financials was for the quarter ending on September 30, 2022. It reported total revenue of $24.2 million, with a cost of revenue of $14.8 million, for a gross profit of $9.4 million. Its operating expenses were $8.4 million, with $1.03 million in operating income.

Its balance sheet shows it had cash and cash equivalents for the nine months ending 9/30/2022 of $46.96 million, net receivables of $13.4 million, and inventory of $148,582, for a total of $62.4 million of current assets. Total assets came in at $69.1 million.

Why the surge in the stock price?

It’s difficult to determine the reason(s) why HOLO has undergone a surge in its stock price. It began 2023 trading at $2.33 per share. By January 10th, the stock closed at $7.65 for a gain of 228% in six trading days. The next day, it had a slight pullback, only to close at $7.95 to end the week.

One theory is that retail traders jumped into this stock, hoping to make it the next meme stock after AMC, GameStop and Bed Bath & Beyond. However, the stock statistics show that only about 195,000 shares are short, making up less than one percent of total shares.

Another theory is stock price manipulation, as this is a Chinese-owned stock. This scheme works by finding thinly traded securities and placing trades to make it look like there is increased interest and activity in the stock. Scammers will typically post on stock trading forums and message boards, pumping up the stock to get unsuspecting traders to buy in, pushing the stock price higher. Eventually, the scammers sell out of their holdings, taking their profit with them. The stock price craters, and the unsuspecting traders are left with massive losses on a stock with little chance of regaining its previous price.

A final theory is that MicroCloud Hologram has a higher than average return on capital employed, meaning they can extract more income from the money they invest in the business compared to other companies in the same space.

As it stands now, MicroCloud Hologram has a 17% return on capital employed compared to the 10% average for the software industry. With revenue growing and the company keeping current liabilities low, the hope is that this growing company will continue to improve its income and margins. As a result, the stock price could move higher. It is important to note, though, that MicroCloud Hologram’s return on capital employed has been decreasing over the past few years. This doesn’t necessarily mean growth is slowing but is something to pay attention to moving forward.

Finally, the stock was trading at around $10 per share from 2021 until September 2022, when the stock price cratered. This was due to the merging of MC Hologram and Golden Path, which was completed on September 16th. The merger provided a valuation of MicroCloud Hologram and its subsidiaries and businesses of $450 million.

It is unclear why the stock dropped from roughly $10 to $1.67 five trading days following the deal’s closing. Looking at the company’s estimated value of $450 million and the 50.81 million shares outstanding, the company should be valued at around $8.85 per share.

The bottom line

A stock rallying over 200% in a few days is not uncommon, given breaking news or a company merger. But when it comes to MicroCloud Hologram, the rally is a mystery as there was no news released involving the company. Investors considering this stock should be careful as this could be a case where some people are manipulating the stock price for their own gain.

Careful investors might benefit more from looking into the Emerging Tech Kit from Q.ai. This kit uses artificial intelligence to spot trends and take advantage of inefficiencies in the stock market.

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