Shares of WiMi Hologram Cloud (NASDAQ:WIMI) were rallying on Monday after the company announced it has created a new subsidiary to focus on artificial intelligence technology and cloud services. The company's chief operating officer was also promoted to the chief executive officer position, following the previous CEO's resignation last week.
WiMi stock was up as much as 13% early in today's session, but it traded much higher earlier in the year thanks to a lot of hype for the potential of its technology. The company currently only makes money by creating advertising campaigns for its clients and by processing mobile app payments through its middleware software. But investors have pointed to the company's intellectual property as reason to believe it could be something more than what it currently is.
Today, investors are celebrating the news that WiMi created a new subsidiary named VIYI Technology. VIYI will function as a stand-alone company to further develop WiMi's intellectual property into something that can actually generate revenue. Earlier this month, WiMi's chief technology officer, Yi Chengwei, resigned for "personal reasons," but now he's back with the company to take the CEO position at VIYI.
This is the second subsidiary WiMi has created recently. In August, the company announced the establishment of Lixin Technology, a company that will focus on "holographic vision intelligent robots" and fabless semiconductor technology.
It's still too early to know if VIYI Technology will improve WiMi Hologram Cloud's business long term, but I take this news as a positive. If the company truly has game-changing technology, then it needs to be developed as quickly as possible. The creation of VIYI could do that.
It's a positive piece of news for a company still surrounded by many question marks. Included in the uncertainty is the appointment of former COO Shuo Shi as WiMi's new CEO. This follows the surprise resignation of Fanhua Meng on Oct. 16. The company said Meng left for personal reasons, but an unexpected shakeup at the top position should always be viewed with caution.