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Friday, May 20, 2022

WiMi Hologram Cloud Inc. (WIMI) Stock Dropped 58% in Previous Year. What’s Happening?

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WiMi Hologram Cloud Inc. (WIMI) went public almost two years ago in April 2020. It is a Chinese technical solution provider for the holographic cloud comprehensive issues with a key focus on professional sides including holographic AR automotive HUD software, 3D holographic pulse LiDAR, holographic semiconductor, metaverse holographic equipment, and metaverse holographic cloud software. The company belongs to the media industry of the communication services sector and is ranked at 16th spot out of a total of 22 companies in this industry. Per-capita Chinese expenditure on recreation is expected to reach RMB3,300 in 2023, showing a compound annual growth rate of 8.2% through 2018-2023. The surge in recreational expenditure boosts the growth of the relevant markets including the entertainment industry.

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WIMI: Recent Announcement

WIMI updated on March 28, regarding the approval of its VR HMD product for the consumer market, WIMI HoloVR, to enter the US market by the Federal Communications Commission. It is the foremost VR device that supports double-clicking See-through, adopting the important color SEe-Through dual-camera scheme. It also uses a VR gaming pad with innovative broadband vibration technology, which can copy various vibration experiences. The device is forecasted to be the key entry point for metaverse holographic VR technology in all types of interactions.

WIMI: Revenue and Earnings

The company recorded stellar growth in its revenues and net earnings for the first half of 2021. Total revenue represents a phenomenal 202% gain over the year from 2020 to 2021, as revenue during H1 2021 was $ 79.9 million. Also, the company’s net earnings recorded for H1 2021 were $ 5.0 million, observing a gain of 40.3% in comparison to the same period of 2020. All the values in the chart are in millions of RMB.

Source: Chartmill

Comparison with Peers

There is strong competition between holographic AR businesses as both the local and international players are present in the market primarily focusing on hardware and application software development respectively. The company is competing favorably when it comes to its peers but the competition will be tough in the future. When comparing its yearly performance with its peers, it becomes clear that WIMI has outperformed most of its competitors such as DMS and ICLK.

Source: Seeking Alpha

WIMI: Insider Transaction, Valuation, and Analyst Ratings

The total number of outstanding shares of WIMI was recorded to be 93.3 million with no shares reported to be held by the company’s insiders, while the institutions hold approximately 5.39% of its shares. A reputed analyst rating firm, Maxim Group has rated the WIMI stock as hold from its previous position of buy. WIMI’s price-to-sales ratio for the trailing twelve months was reported to be 1.05, which is not much good in comparison to the other companies in the same sector.

Risk Factors

Several risk factors should be kept in mind when buying WIMI stock. As the holographic industry is a relatively evolving industry and its development is a time-consuming process and the efforts may not lead to the beneficial results as estimated by the company. The competition in the industry also plays a pivotal role in multiple ways. Another limiting factor kept in mind while buying WIMI stock is the lesser number of specialists in this field which will result in slow progress in tech breakthroughs.

Bottom line

WIMI’s earnings are estimated to grow at a rate of 87% over the annual period. Also, its shares are volatile over the last three months period. This indicates that the investors must perform their homework before purchasing the shares as its stock price is 58% lower in the past year.

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