Up 64% on Friday - should you buy HOLO stock right now?

HOLO stock moved up 64% on Friday. So the million dollar 💵 question is:

Should you buy HOLO stock right now? Before you do, here's a few things you need to know about HOLO:

First, Microcloud Hologram Inc. (ticker: HOLO) is a tech firm incorporated in the Cayman Islands and headquartered in New York.

As its name suggests, Microcloud Hologram Inc. ('HOLO') provides holographic technology such as 'light detection and ranging', or 'LIDAR'; a remote sensing method for creating 3D models of the real world. Sounds pretty cool, right? But we know you don't really care too much about all that.

The pertinent question is, is it buy?

Before we answer that, here's the skinny on HOLO's market fundamentals:

First, from a long-term investment perspective, it is worth noting that HOLO's share price is down 99.91% in the past 5 years and it has undergone a ton of reverse stock splits, suggesting it is struggling to grow or hold its share price as it looks to generate income.

For the uninitiated, a reverse split is when a company consolidates its shares in order to artificially increase share price so it can regain compliance with the exchange or face delisting.

HOLO, which is listed on NASDAQ, is basically in big trouble if it goes down again below a dollar between now and October 9, 2025, because of recent changes which accelerate the process of delisting. Unless investors get it out of jail, it will go bankrupt.

Two, the stock is currently hugely unprofitable, so we need to look at how fast the company is burning through its own cash reserves, known as 'cash burn rate'. HOLO has a negative free cash flow, which suggests it is spending more on investments in the company than it generates from it's day to day operations.

Third, the company has just released a $28m convertible or 'promissory' notes offer - now there are pros and cons to this. One of the pros being it keeps them out of financial trouble as it helps to attract investors that are not content with just shares in a 'start-up' company, but rather equity. The con being that creditors can convert their debt to common stock on expiry of these notes, which would severely dilute the shares of existing shareholders. Given HOLO has a very small market cap of $9.84m, that could potentially devalue the company further, making it less attractive to investors.

So far, not so good! Now let's look at the current trending factors that may suggest a short squeeze:

1) The stock has reached a 52-week low and is now currently oversold on the RSI (relative strength index) suggesting a trend reversal.

2) There is unusually high volume activity.

3) It was previously the second highest short stock, putting in on the map of retail investors and meme stock enthusiasts.

So based on the fundamental analysis, would I invest in right now HOLO? Hard pass. Would I swing or day trade HOLO in the near term? Abso-friggin-lutly.

However, given the risks involved with this company right now, I would only invest a small portion of my trading capital into HOLO for a short-term play. And judging by recent price action, it looks like price is going to move up again in the next few days.

Check back tomorrow for more daily insights.

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