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Why WiMi Hologram Cloud Stock Was Going Back Down Today

By Jon Quast – Oct 13, 2020 at 12:40PM

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Yesterday's gains weren't based on substance, making it easy for the stock to go back down today.

What happened

Shares of WiMi Hologram Cloud (WIMI -0.65%) were going back down Tuesday after surging 34% higher Monday. On Monday investors were excited after an article made a vague connection between human brain interfacing technology and holograms. But today WiMi stock has fallen 10% as of 12 p.m. EDT.

So what

It was only natural for WiMi stock to give back some of yesterday's impressive gains. In fact, the drop started yesterday. Around 2 p.m. it was trading about 55% higher but fell to just 34% higher by the end of the day. Today's drop is simply a continuation of what started yesterday.

A rising red arrow breaks near the top, resulting in the arrow pointing down.

Image source: Getty Images.

If WiMi had announced something fundamental to the business like quarterly earnings, a new customer, or an acquisition, then perhaps yesterday's gains would have been sustainable. But yesterday's article by MobiusTrend Group simply discussed technological developments in brain-to-computer interfaces, with a passing mention of WiMi's business near the end. While it was an interesting read, there wasn't anything of substance for WiMi Hologram Cloud shareholders.

Now what

When researching stocks, it's important to consider the potential upside and the risks. It seems WiMi Hologram Cloud is developing a small following of optimistic shareholders who point to the exponential growth potential of the hologram industry and WiMi's 132 patents, which its management says is the most in the business. 

However, there are still risks to consider. Earlier this year WiMi stock surged after an article pointed toward WiMi's leadership position in its space. However, while the article was by a third party, its listed source was WiMi Hologram Cloud -- that's obviously not an objective source of information. Furthermore, this article was followed weeks later by a new public offering of WiMi stock to take advantage of the high price per share -- that's some questionable timing. 

Either way, WiMi stock is likely to be a wild ride over the long term. If investors do decide to climb aboard, they'll need to buckle up for many days like today.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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