MicroCloud (HOLO) stock has surged: Learn from BETS and avoid

MicroCloud Hologram (NASDAQ: HOLO) stock price is one of the best performers in Wall Street this year. It surged to a high of $43.13 on Tuesday, up by over 3,000% from its lowest level this year. This jump has brought its total market cap to more than $163 million. 

This jump has happened in a high-volume environment. The total number of shares traded on February 7th stood at over 194 million. Volumes have totaled more than 235 million, which is much higher than its historical level. 

There was no major news driving the stock, signaling that the rally is driven by retail traders. This is notable because, recently, we have seen several Chinese companies get popular among this group. For example, companies like Bet Brother, AMTD, and Top Financial have seen a lot of volume in the past few months.

This rally reminds me of 2021 when companies like GameStop, AMC, and Bed Bath and Beyond surged for no reason. Well, most of the meme stocks of the day have plunged while BBBY has already collapsed. ContextLogic, the parent company of Wish.com, sold the company for a huge discount compared to its peak.

MicroCloud Hologram, like other cash-strapped companies that have surged, has used the opportunity to raise capital and dilute its shareholders. In September, it filed a $100 million mixed shelf, allowing it to raise additional cash.

Fundamentally, I believe that the company faces a difficult path ahead as its fortunes wane. The most recent results published in June showed that its revenue came in at $6.9 million, lower than the $10.9 million it reported in the same quarter a year earlier. Its net loss stood at $0.5 million, after it made a $2.1 million a year earlier.

MicroCloud’s stock is still 765 below its all-time high. It has joined other companies that went public through a SPAC merger in this crash. Some of the other SPAC companies that have evaporated are Virgin Orbit, Virgin Galactic, Quaenergy, Electric Last Mile, and Enjoy Technology.

Therefore, as I wrote on ICU stock, there is a risk of buying and holding meme stocks like MicroCloud Hologram since the story does not end well. Most recently, we have seen it happen with the likes of Bit Brother and T2 BioSystems. After surging recently, Bit Brother stock has plunged by over 75% this year.

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