At a time when most Chinese tech stocks are getting walloped thanks to a government crackdown, shares of Luokung Technology (NASDAQ:LKCO) are on fire, rising by nearly 13.9% as of 2 p.m. EDT today. Two big factors seem to be driving this $2 penny stock higher.
China-based Luokung specializes in digital mapping technology. It primarily offers location-based services in China and runs a mobile application that distributes a variety of content and services.
Of late, regulators in China have come down heavily on Chinese stocks listed in the U.S., citing security and data-privacy concerns, and some of the latest developments have rattled stocks across the board. Among the most glaring examples is DiDi Global (NYSE:DIDI): Just this morning, the Cyberspace Administration of China (CAC) announced that 25 mobile apps operated by the ride-hailing giant have been removed from app stores, barely days after it ordered DiDi to stop registering new users.
In further evidence that China continues to intensify its tech clampdown, 360 DigiTech (NASDAQ:QFIN) confirmed to Seeking Alpha today the removal of its apps from app stores.
Luokung's name, fortunately, hasn't popped up yet in the ongoing tech crackdown, and that has (not surprisingly) lifted the market's sentiment about the stock.
In the second big development boosting the stock, S&P Global (NYSE:SPGI) just confirmed that Luokung is among the handful of Chinese companies now eligible to be included in the S&P Dow Jones indexes and will be considered for inclusion when S&P next rebalances its indexes. Earlier in March, S&P Global removed Luokung stock along with three others under an executive order.
This latest S&P development adds to Luokung's recent wins. To name a few, the Nasdaq exchange withdrew its decision to delist it in May after a court ruling. And in June, the company made two big business announcements.
First, its subsidiary eMapgo Technologies won a digital traffic-management contract for a highway in China. Days later, eMapgo struck a deal for autonomous-driving data management with a company it called "one of the world's top auto manufacturers." Luokung's existing auto customers and partners include big names like Ford, Daimler's Mercedes-Benz unit, and Toyota Motor's luxury brand Lexus.
While investing in international stocks, particularly Chinese stocks right now, can be risky, Luokung could be a big beneficiary from the rise in adoption of futuristic technologies like autonomous driving, making it one of the few Chinese small-cap stocks worth watching.