The artificial intelligence bandwagon is getting fuller by the day, it seems. Even though it’s not a pure-play AI company by any means, meme-stock traders seem to be enamored with MicroCloud Hologram (NASDAQ:HOLO) lately. However, the risk greatly outweighs the rewards with HOLO stock unless you’re only in it for a quick trade.
That’s what I mean when I say that MicroCloud Hologram stock is for trading, not investing. It’s fine for day traders, but if you’re in the market for stocks with buy-and-hold potential, don’t even think about investing in MicroCloud Hologram.
HOLO Stock: Do You Know What You Own?
I strongly suspect that many HOLO stock traders don’t actually know much about the company. So, here’s a quick recap. Based in China, MicroCloud Hologram develops holographic technology. Recently, the company announced its plans to join the Communications Industry Association.
That news item, which isn’t likely to have a material impact on the company’s near-term revenue or income, was enough to prompt a 56% pump in the MicroCloud Hologram stock price. The next day, the stock rallied another 10% for no discernible reason.
Well, I take that back. There is a reason: it’s all about the memes and get-rich-quick dreams. When the short-squeeze crowd latches on to a stock, they’ll pump and dump it with or without provocation.
Another share-price moonshot occurred after MicroCloud Hologram joined the AI trend. More specifically, the company developed a “holographic virtual digital human based on” OpenAI’s ChatGPT “generative pre-training model.”
What’s Your Excuse for Trading MicroCloud Hologram Stock?
Furthermore, HOLO stock traded on what MarketWatch called “record volume” after MicroCloud Hologram enacted a reverse stock split. Seasoned investors know that a reverse stock split doesn’t change the actual value of a company. However, evidently the meme-stock crowd will use practically any news item as an excuse to jump into a trade.
Yet another massive rally happened when MicroCloud Hologram regained compliance with the Nasdaq exchange’s Listing Rule 5550(a)(2), which requires a minimum bid price of $1 for a certain number of consecutive days. Again, we have an event that doesn’t alter or reflect on MicroCloud Hologram’s fundamentals.
Getting the MicroCloud Hologram stock price is all fine and well. Yet, MicroCloud Hologram’s Form 10-Q for 2023’s first quarter (the most recent quarterly report I could dig up) still shows a sharp revenue decline. Plus, the Form 10-Q still reports a $3.5 million net loss because of MicroCloud Hologram’s ordinary shareholders for that quarter.
Nevertheless, HOLO stock zoomed 70% higher on the Nasdaq exchange compliance news. Three days later, the stock coughed up half of those gains. So, you’d better be nimble if you plan to trade shares of MicroCloud Hologram.
HOLO Stock: Too Hot to Handle, Too Cold to Hold
Frankly, the vast majority of people shouldn’t go anywhere near MicroCloud Hologram stock. It’s too volatile and risky for serious investors. Maybe it’s fine for day traders, but don’t you dare hold this hot potato of a stock for more than 24 hours.
At the very least, learn what MicroCloud Hologram actually is and does. It’s not purely an AI company, and MicroCloud Hologram certainly isn’t a profitable business. Consequently, it’s wise to just maintain a safe distance from HOLO stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.