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Why are wearable device inventories (WLDS) increasing by 250%?

Source: shutterstock.com/LDprod

Portable devices (NASDAQ:WLDS) the stock soars on Thursday following a critical disclosure. Earlier this morning, the Israel-based company announced that pre-orders were available for its flagship product, a neural input interface system that allows users to control digital devices via subtle finger movements. At one point WLDS stock was up over 300%, the shares are now trading up around 250% at the time of this writing.

Basically, wearable devices have the potential to take digitization to the next level. Leveraging its artificial intelligence (AI) powered by non-invasive motion sensing innovation, the company’s flagship product – the Mudra Band – integrates with Apples (NASDAQ:AAPL) Apple Watch to facilitate contactless interfacing. In other words, users will be able to use the Apple Watch without physically touching the device, theoretically offering greater utility.

That said, while WLDS garnered some early buzz due to its potential, its general volatility is reminiscent of the dangers of speculative initial public offerings (IPOs). Potential investors should always perform due diligence before investing in this name.

WLDS stock rises following achievement of underlying ambitions

Prior to its public market debut, Wearable Devices mentioned in a statement on Form F-1 filed with the United States Securities and Exchange Commission (SECOND) that the Mudra platform has significant implications beyond adding utility to the Apple Watch. Specifically, Mudra has potential applications for smartphones, augmented reality (AR) devices, virtual reality (VR) headsets, TVs, PCs and more.

Bringing this innovation to market has always been one of the main question marks surrounding the WLDS stock. Similar to other speculative companies, much of Wearable Devices’ bullish thesis centers around its potentiality. Now that the Mudra Band is available for pre-order, investors are gaining confidence.

Unfortunately for longer-term stakeholders, the journey has not been easy. Wearable Devices made its public debut in September 2022. Back then, after a record IPO cycle in 2021, the new listings arena slowed down. So, retail investors just weren’t as excited about WLDS stocks as they might have been in 2021.

More importantly, the company’s finances also presented a difficult picture. Last year, Wearable Devices only generated $45,000 in revenue against a net loss of $6.5 million.

Redness spared

Another factor boosting WLDS stock today is the company’s announcement earlier this week regarding its status on the Nasdaq. Specifically, management revealed that the exchange granted Wearable Devices an additional compliance period of 180 days (or until Nov. 20, 2023) to regain compliance with its minimum bid price rule. The Nasdaq first informed the company on Nov. 23, 2022, that the shares failed to meet the $1 minimum price requirement.

So today’s dramatic swing appears to have killed two birds with one stone – reaffirming investor confidence and filling a critical Nasdaq benchmark. However, the savagery here also reflects the risks associated with speculative IPOs. Despite the triple-digit gain, WLDS stock is still down 37% since its debut.

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As of the date of publication, Josh Enomoto has not held (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to investment markets, as well as various other industries including law, construction management and healthcare.


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