Recently, Jack Vander Aarde, equity research analyst from Maxim Group, LLC gave WIMI Hologram Cloud (NASDAQ:WIMI) a "buy" rating with a target price of $8, meaning the stock has 200% upside potential.
WIMI Hologram Cloud (NASDAQ:WIMI) has established comprehensive and diversified holographic AR content library among all domestic holographic AR solution providers in 2018. It is in the first place in China holographic AR industry in terms of income, number of customers, holographic AR content, the quantity of holographic AR patent and software copyright. In addition, such giants as Microsoft, Apple, and Google scrambled to add the investment in AR/VR market since last year, it is expected to enter the new product release period in 2020. Data show that manufacturers at home and abroad are expected to release more than 10 new AR products, top companies have revealed the release of VR products in 2020, and the performance of the new products has improved significantly. The ultra-high reliability and low delay communication of 5G communication technology is expected to solve the shortcomings of VR/AR development. Investment Strategy believes that 5G cloud will open up the VR/AR scene and continuously release the vitality of the industry. Under the continuous effort of major manufacturers, it is expected to create popular styles and accelerate hardware penetration.
After the landing and implementation of 5G, the first scenario of application will accelerate the development of VR/AR, and the growth rate of the Chinese market will be higher than that of the world. Therefore, with the aid of 5G, communication gaps in immersive game scenes such as VR/AR will be made up, and the commercial use of VR/AR in immersive games is expected to accelerate. According to the research of China Academy of Information and Telecommunications, the scale of the global virtual reality industry is nearly RMB 100 billion, and the average compound growth rate from 2017 to 2022 is expected to exceed 70%. According to the prediction from Greenlight, the scale of the global virtual reality industry will exceed RMB 200 billion in 2020, among which the VR market is 160 billion and the AR market is RMB 45 billion. In addition, according to the latest IDC Global Augmented Reality and Virtual Reality Expenditure Guide released by IDC, spending in China's AR/VR market will reach $65.21 billion by 2023, which is a significant increase from the 2020 forecast of $6.53 billion. In the mean time, the compound annual growth rate of (CAGA) from 2018 to 2023 will reach 84.6%, which is higher than the 78.3% growth rate in the global market.
Jack Vander Aarde, Equity Research Analyst of Maxim Group addressed in his report:"WIMI is well-positioned to be a leader in the augmented reality (AR) secular growth market.The total global augmented reality (AR) market is expected to register a 63%+ CAGR through 2025 according to Zion Research. Companies are increasingly utilizing AR technology for a variety of purposes. Frost & Sullivan projects China's holographic AR industry in terms of total revenues to grow by a CAGR of 83%, increasing from RMB 3.6B (~$0.5B USD) in 2017, to RMB 455B (~$65B USD) in 2025."
Jack also said, "WIMI’s AR hologram advertising services appear well-ahead of peers involved in traditional digital advertising. WIMI’s AR advertising services revenue increased 48% y/y to $38.2M (84% of total mix) in 2019. The service offers companies the ability to have 3-D models of their products or brand items uploaded into advertising footage or streaming service content without the need to shoot raw footage or use expensive special effects teams."
According to the annual report, WIMI's holographic business began to increase gradually in 2017. Revenues in 2017-19 were 192 million US dollars, 225 million US dollars and 319 million US dollars, with growth rates of 17% and 41% respectively, showing an accelerating momentum. In terms of net profit, it was 0.73 trillion, 0.89 trillion and 1.02 trillion in 17-19 years.
In the year ended December 31, 2019, holographic AR ads created using the company's advertising solutions generated approximately 9.7 billion views, an increase of 47.0% from approximately 6.6 billion views in 2018.
It is not difficult to see from the above data WIMI Hologram Cloud (NASDAQ:WIMI), the business growth of the entire WIMI holographic is in a benign development trend, from 2017- 2019, the financial revenue in the three years continues to increase. From this market, it is reported that the number of business income generation is increasing, and the market expansion is expanding.
According to Jack Vander Aarde's report, Maxim expects WIMI to leverage its core technologies and IP portfolio to rampup its AR hologram entertainment segment. WIMI’s AR entertainment revenue increased 17% y/y to $7.4M with a gross margin of 89.4% in 2019. The company provides app developers with mobile payment integration and software application development services, and much more. WIMI has a library of over 4,600 ready-to- use content items, including anything from a hologram, or a musician in concert to realistic ocean waves, that can be projected from connected hologram projectors installed in venues across China.
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