Hall of Shame

Communication Services

WiMi Hologram Cloud Inc. (WIMI US)

Year: 2021




WiMi Hologram Cloud Inc. provides augmented reality (AR) based holographic services and products in China. It operates in three segments: AR Advertising Services, AR Entertainment, and Semiconductor Related Products and Services. WiMi Hologram Cloud Inc. was founded in 2015 and is headquartered in Beijing, the People's Republic of China.

The company started trading on the NASDAQ in April 2020 and raised US$26.13m in its IPO. Additional share offerings raised US$145.64m; (Jul-2020: US$61.84m, Mar-2021: US$83.80m).

On 23 September 2921, Swan Street Research released a short report, "WiMi Hologram Cloud: How a Low-Quality China Hustle with Fake Technology Duped Retail Investors to Sinkhole $160 Million". Swan Street believed that WiMi Hologram was far more interested in nonsensically stringing together unrelated buzzwords, raising capital, and quietly deploying cash into suspect “investments”, than in building any “technology” business. The report focused on issues in three areas:

  • In one year, since its IPO over US$100m was spent on highly questionable investments. During this time, five board members had resigned, including two audit committee chairmen. The investments included:
    • US$17m across 66 PRC-based companies which had tenuous-to-zero relevance to WiMi Hologram’s claimed nor legitimate operations;
    • US$35m to acquire “Existing Artificial Intelligence” Technologies which was an Electronics Wholesaler with No Artificial Intelligence Technologies.
    • US$27m in an undisclosed public security listed stock “in either US or Hong Kong”'
    • US$22m on “real estate investments” in Guangdong.
  • Questionable stock promoters who only seemed to have been set up around the same time as WiMi Hologram's IPO. Two of these stock promoters were very active but neither had a lot of operations outside WiMi Hologram promotion. Neither responded to Swan Street's outreach as interested customers. Swam Street believed that this was highly suggestive of non-disclosed stock promotion and arguably crossing into stock manipulation.
  • Swan Street believed that WiMi Hologram Cloud is a Low-Tech, Low-Margin, Unsexy, Challenged Business. It based this on the following:
    • WiMi Hologram originated as a roll-up of three internet advertising businesses which was unsuccessful in listing on the Chinese OTC due to severe disclosure deficiencies, and disciplinary action,
    • WiMi Hologram advertising services are “holographic”, “AR”, and “3D” but it is substantially indistinguishable from most internet advertisers;
    • it has seen flat gross profits since at least 1H18,  the earliest disclosure;
    • WiMi Hologram claims focus “on the research and development of the application of holographic AR technologies in the area of semiconductor, cloud computing, artificial intelligence, big data, 5G” - however not realistic based on a budget of US$5M over three years.
    • WiMi Hologram’s second largest FY20 Customer is an app developer with a single app with minimal downloads (~10k/mo.) and revenue (~$20k/mo.).
    • One of WiMi Hologram’s largest customers filed for bankruptcy in late December 2020. This internet advertising business shares their phone number with a business selling religious Lanterns;
    • WiMi Hologram’s Semiconductor business is predominantly Fe-Da Electronics which is an electronics wholesaler with a consummately low gross margin in the low-teens.

Swan Street concluded saying it believed WiMi Hologram is a modern 2020/2021-vintage China Hustle. That WiMi Hologram appeared to engage in extensive undisclosed stock promotion, alluding to high-flying technologies to which WiMi Hologram appeared to have near-zero exposure.

Swan Street Research: How a Low-Quality China Hustle with Fake Technology Duped Retail Investors to Sinkhole $160m, 23 Sep 2021
WiMi Hologram: Annual Report, YE - Dec. 2020
WiMi Hologram: Annual Report, YE - Dec. 2019
WiMi Hologram: Prospectus, 31 Mar 2020
US SEC: WiMi Hologram Cloud Filings
PR Newswire: News from WiMi Hologram Cloud Inc.