Shares of WiMi Hologram Cloud (NASDAQ:WIMI) skyrocketed on Wednesday morning after the company announced newly patented laser technology with applications in driverless cars, electric vehicles, medical imaging, and more. The company's stock has languished over the last several months -- recently down more than 75% from 52-week highs. However, WiMi stock is turning it around today, up 20% as of 10:45 a.m. EST.
According to the press release, WiMi has been busy researching and developing 3D holographic pulse laser technology. With autonomous driving, vehicles use sensors to measure things, like the distance between your car and those around it. It seems WiMi's device can take that information and present a holographic projection of this information to those in the vehicle.
WiMi is an international stock in China. According to the company, China's government has granted it a patent for this technology. WiMi believes this strategically positions it for success in the future. Specifically, the rise of electric vehicles could create a greater need for sensors going forward, and WiMi's patented technology could be used to display information.
The press release didn't mention any monetization strategy for WiMi's new device. Therefore, the stock is going up big today on speculation. While intellectual property is good, WiMi will still need to market it to customers.
If I were a betting person, I'd wager that WiMi Hologram Cloud will announce a stock offering in the coming days to take advantage of its surging stock price. That's because the company has a track record of doing this. On July 10, WiMi released a report about the rapidly growing hologram market, namedropping Tesla's Elon Musk and Alibaba's Jack Ma in the process. The stock more than doubled in a single day on this report.
WiMi took advantage of its higher stock price days later when it announced a stock offering to sell more than 7.5 million shares, raising over $61.8 million. The company needed the money -- revenue in the first half of 2020 was up only 7.8% to $24 million, but cost of revenue soared 134%, resulting in just $3.2 million in net income.
Don't let the name of the company fool you -- WiMi Hologram Cloud primarily generates revenue from advertising campaigns and through its middleware payment-processing software. Given this reality, I'd be very cautious placing too much faith in the company's ability to monetize 3D laser technology in electric vehicles until it presents a clear strategy and also announces customers.