Augmented-reality holography is an exciting market with incredible growth potential. WiMi Hologram Cloud (NASDAQ:WIMI) is a Chinese company that’s expanding with this emerging industry. However, it’s possible that WIMI stock has inflated too much, too quickly.
It’s important for informed investors to study new industries. This is how life-changing returns can be achieved. Yet, we must not forget the old saying that price is king.
A comprehensive view of WIMI stock will show that the company is in a market niche with momentum, but the share price needs to level off and find a range. Until that occurs, one can watch from the sidelines and monitor the development of WiMi Hologram Cloud.
WiMi Hologram Cloud Stock Spikes
The initial public offering for WiMi Hologram Cloud stock took place on April 1 on the Nasdaq stock exchange. The interest surrounding holographic augmented-reality technology apparently wasn’t enough to boost the share price, though.
Thus, WiMi Hologram Cloud stock gradually declined from $5.50 in early April to $3.84 on July 9. This is a textbook example of how not every IPO stock is going to be an instant winner.
Over the next couple of trading sessions, however, WiMi Hologram Cloud stock shot up like a rocket. By July 13, a share was worth nearly $25. These are the kinds of gains that people sometimes wait years for.
But what was the catalyst behind this moon shot? Oddly enough, there apparently wasn’t any company-specific news to cause the stock price to explode.
Reportedly, former Alibaba (NYSE:BABA) chairman Jack Ma made an appearance at the World Artificial Intelligence Conference. And when I say, “appearance,” I mean that Ma wasn’t physically at the conference.
Ma’s physical absence was due to concerns over the novel coronavirus, which is perfectly understandable. So, Ma made his appearance via a holographic image. It was more than just an appearance, actually, as the miraculous technology of holography enabled Ma to give a full presentation.
The Letdown and the Drawdown
The next thing you know, this obscure little company’s stock was a shooting star. Obviously, Ma is still a major influencer in the technology field.
And so, WiMi Hologram Cloud stock experienced the typical IPO hype spike, but just delayed by several months. Since shooting stars don’t go up forever, you can probably guess what happened next to the stock price.
If you guessed that WiMi Hologram Cloud stock plummeted, you get a gold star. By July 24, the share price was down to $11.21. I constantly say that price chasers get punished, but they really got walloped this time.
There’s no specific reason for the drawdown except perhaps the market’s realization that Ma’s holography-facilitated appearance shouldn’t have been sufficient to induce a 500%+ stock-price increase.
Don’t Approach, but Don’t Walk Away
Does the price pop-and-drop mean that informed traders should avoid WiMi Hologram Cloud stock forever? Not necessarily. Instead, investors can appreciate the holographic-tech niche’s potential while awaiting a better entry point.
WiMi Hologram Cloud claims that China’s augmented-reality holography market was worth 12 billion Chinese yuan last year. That would translate to around $1.7 billion.
Moreover, the company projects that this market will increase dramatically to 455 billion yuan by the year 2025. WiMi Hologram Cloud aims to dominate this market as it leads the industry with 132 patents.
The company further claims to possess image-processing technology that’s 80% faster than the average processing speed within the industry. These stats present a powerful argument in favor of the holographic-technology industry and WiMi Hologram Cloud in particular.
Therefore, you don’t have to cross the company off of your watch list. Yet, it might be a good idea to wait until the stock isn’t in falling-star mode.
Bottom Line on WiMi Hologram Cloud Stock
There are compelling reasons to believe in the future of augmented-reality holography technology.
However, this doesn’t mean that you have to jump in and buy WiMi Hologram Cloud stock immediately. It’s perfectly OK to wait for a better entry point as the share price struggles to find its groove.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.