WiMi IPO: Chinese Holographic Company Goes Public
A WiMi IPO was first announced in June 2019. Now, during the coronavirus outbreak, WiMi decided to launch its IPO. And WiMi stock hit the market with success.
Here’s what we know…
WiMi IPO: The Business
WiMi Hologram Cloud (Nasdaq: WIMI) is a Chinese tech company founded in 2015. It offers augmented reality (AR)-based holographic services and products. Currently, the company has advertising services and entertainment products. It aims to provide “an innovative, immersive and interactive holographic augmented reality experience for [its] customers.”
Platforms such as Google and Apple now have tools that make access to AR content easier. According to Frost and Sullivan, in 2025 advertising and entertainment markets will be worth $20.3 billion and $25.4 billion, respectively.
With those numbers, the WiMi IPO might look like a good investment opportunity.
WiMi IPO: The Details
WiMi first filed with the SEC in June 2019. But it wasn’t until April 1, 2020 the company went public. Few companies dared to go through the IPO process during the coronavirus pandemic. However, the WiMi IPO appears to have been a success.
On April 1, WiMi raised $26 million. The company offered 4.8 million American Depository Shares (ADS). Each ADS represents two Class B ordinary shares. WiMi sold them at $5.50 per share. That’s the low end of its original range of $5.50 to $7.50. The offering valued WiMi at $325 million.
The company gave underwriters a 30-day option to buy 750,000 more ADS.
Services and Revenues
As mentioned above, WiMi has two main services, advertisement and entertainment. In the first six months ending June 30, 2019, about 82.7% of revenue came from AR advertising services. The remaining 17.3% came from holographic AR entertainment products.
The numbers listed by WiMi for the 2019 financial year are unaudited. However, the sales and growth are impressive. For the year ended December 2019, sales totaled $45.6 million. That’s a 41.1% increase from 2018, which was $32.2 million.
In 2019, advertising sales increased about 47%. Revenue in 2018 was $26.2 million. Revenue in 2019 was $38.3 million. WiMi claims the increased revenue was from new customers. In 2018, WiMi had 121 customers. That number went up to 153 in 2019.Also, the average revenue per customer increased. The company believes this is due to its improved technology.
WiMi’s entertainment revenue also saw an increase. For the year ended December 31. 2019, net income was about $7.4 million. That’s an increase of 17% from the 2018 income of $6.3 million.
WiMi isn’t an investment unicorn. However, its year-over-year growth should be noted by investors interested in the WiMi IPO.
The Largest Content Library in China
The company also has a large content library. It consists of holographic AR content. It ranges from 3D models to holographic short videos. As of June 30, 2019, WiMi owned 4,654 pieces of content. That includes:
- 2,961 for education
- 851 for tourism
- 739 for arts and entertainment
- 103 for popular science
In addition to its own content, WiMi also works with third parties for copyrighted content. The company works with various brands, film producers and talent agencies for content.
Strengths, Challenges and Strategies
On WiMi’s filing, the company lists four strengths. WiMi believes these strengths position them as a leader in the AR market.
- Leading Holographic AR Application Platform
- Market Potential
- Cutting-Edge Technology and High-Quality User Experience
- Experienced Management
But despite WiMi’s success in the industry, the company faces challenges. As technology improves, WiMi needs to keep up. Here are some challenges the company lists:
- Operating in new and rapidly evolving market
- Competing effectively
- Sustain and manage growth
- Keep up with industry trends
- Develop and market new products and services
- Obtain enough capital
And finally, WiMi lets investors know it’s developed strategies to achieve its goals. Some of those strategies includes:
- Marketing to broader market
- Invest in technology and innovation
- Explore acquisition or investment opportunities
The WiMi IPO was a long process. As a young company, WiMi needed to make sure it was positioned to successfully go public. The SEC filing can be found here.
How the Coronavirus Affected WiMi
With a global pandemic, WiMi had to acknowledge the affect coronavirus has on the company’s performance. One impact was closing offices. Starting in February, WiMi had a work-from-home policy. It reopened offices on March 16.
Another issue is revenue. WiMi notes that customers have asked for more time to pay. And if the outbreak continues, more customers will fail to pay on time. WiMi is working with customers on payment schedules and hasn’t had issues. WiMi also noted that all customer contracts still stand.
And lastly, the coronavirus affected global stock markets. Although most companies have put IPOs on hold, WiMi’s IPO was successful. But the company knows the price of its shares will change with the market. And if the markets continue to perform poorly, so will WiMi’s stock.
When Did WiMi IPO?
The WiMi IPO launched on April 1, 2020. Stock is trading on Nasdaq under the ticker symbol WIMI.
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WiMi’s technology is ahead of the game. It’s the leader of an industry analysts think will be worth billions in the future. So the WiMi IPO could be a good way to invest in the holographic market.