Shares of Luokung Technology (NASDAQ: LKCO) fell today after the Chinese mapping technology firm’s first-half report indicated it could face a cash crunch. Luokung stock ended the day down 10.4%.
The company posted revenue of $37.8 million for the first half of the year, up from $7.3 million, thanks to the acquisition of eMapGo Technologies, a provider of navigation services and mapping and an innovator in autonomous vehicle technologies.
Net loss for the period fell from $18.9 million to $26.7 million and was unchanged per share at $0.09.
CEO Xuesong Song attributed the performance of the company’s location-based services business to business growth, which generated $24.5 million in additional revenue. He added, “During the period, Luokung has expanded its partnership base and started to provide our first portfolio of products and services for leading companies in various industries, and worked to successfully overcome the challenges of being designated Chinese Communist Military Company by the U.S. Department of Defense.”
Luokung’s stock has been highly volatile all year due to challenges in China and the market’s own misgivings about the small-cap Chinese tech company that was previously on the Pentagon’s Entity List, meaning it was about to be removed from the list. Nasdaq.
The sale may be a response to the company’s weak balance sheet, as it only has $14.5 million in cash, which won’t be enough to keep the business running for long, given that it has recorded a loss of $26.7 million in the first half. year. It also only had $30.6 million in current assets versus $81.8 million in current liabilities, so the company will need a cash injection to pay its bills.
Luokung raised $32.8 million in a direct offering in September, which should give investors confidence. It is however understandable that the market is wary of a Chinese action on fragile financial bases.
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