MicroCloud Hologram Inc. Sees Record Gain Following Stock Split

Shares of MicroCloud Hologram Inc. saw a significant increase in value and trading volume after a recent reverse stock split. The Beijing-based holographic-technology company announced its plans to join the Communications Industry Association, a nonprofit organization that supports technological innovation and export.

Despite the seemingly ordinary news, the stock surged by an astounding 566.8% in afternoon trading, with a trading volume of 145.3 million shares. This growth surpassed the previous record of a 51.7% one-day gain on Jan. 6, 2023, and the record for one-day trading volume of 5.3 million shares on Sept. 19, 2022.

MicroCloud Hologram Inc. has yet to respond to requests for comment or further information.

While many attribute this rally to short covering, where traders close bets on the stock declining, Ihor Dusaniwsky, managing director of financial analytics at S3 Partners, suggests that this increase should not be classified as a short squeeze.

Short Interest on Meme Stock

Short Interest Overview

Short interest as a percentage of public float is relatively high at 12.5%. In comparison, the original meme stock, AMC Entertainment Holdings Inc. (AMC), has 9.2% of its float shorted, with AMC closing at a record low on Monday.

However, it is important to note that the short interest on this particular stock is quite low. Currently, the value of short interest stands at just $210,000, with only 139,000 shares being shorted.

Market expert, Dusaniwsky, highlights the insignificance of these shorts in relation to the significant trading volume of approximately 145 million shares today. According to Dusaniwsky, it is unlikely that the 139K shorts would have any substantial impact on the stock.

The Impact of Reverse Stock Split

Following a 1-for-10 reverse stock split on Friday, the stock has experienced a rally. The reverse split does not affect the company’s fundamentals but multiplies the stock price by ten by reducing the number of outstanding shares by the same factor.

The company clarified that the reverse stock split was undertaken to comply with Nasdaq’s minimum $1.00 per share requirement for maintaining the listing of ordinary shares.

Previously, on Nov. 28, the company received a notification from Nasdaq regarding non-compliance with the minimum-bid requirement due to its low stock price.

On Feb. 2, the stock closed at $1.83. Adjusting for the reverse stock split, this would equate to a pre-split adjusted price of 18.3 cents.

Yesterday, the stock closed at a new record low of $1.51, following the split adjustment. Consequently, since Oct. 6, 2023, when it last closed above $1 on a pre-split adjusted basis, it has dropped by a massive 87%.

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