Since its Initial Public Offering a month ago, shares of a relatively unknown Hong Kong-based technology business have increased by up to 32,000%.
AMTD Digital debuted on the stock exchange two months ago, generated $25 million in revenue in 2014, and employs only 51 people.
At one point, its market capitalization was $300 billion, comparable to Mastercard’s $25 billion in yearly revenues, and its share price reached $2,555.
AMTD Digital is a Hong Kong-based investment company that is a subsidiary of the New York and Singapore-listed AMTD Idea Group.
In February, the company introduced a metaverse called AMTD SpiderNet, which is primarily utilized by fintech and online influencers. The objective is to collect fees and commissions from both parties.
Two weeks ago, AMTD Digital went public on the New York Stock Exchange, pricing its IPO at $7.80 per share and raising $125 million. Yesterday, the price increased to $2,555; since then, it has decreased to $1,300, representing an increase of 16,500%.
AMTD Idea Group has also benefited from the company’s popularity. It increased by more than 520 percent on Tuesday, prompting trading halts as investors flocked to the stock.
Ben Laidler, eToro’s global market strategist, stated, “AMTD Digital’s market valuation of approximately $300 billion would make it a top-20 firm in the S&P 500, despite its negligible revenues.”
Comparatively, its market worth is now comparable to that of Mastercard, the world’s second-largest card payments processor, which generates $25 billion in yearly revenues. This is not going to end nicely.
Why has the stock price skyrocketed?
Since its IPO, AMTD has not made any major announcements that would have caused its share price to soar. Some have concluded that this is simply a continuation of the meme stock phenomena, in which ordinary investors drive up the price.
As a result of the bear market, this year’s global IPO activity is down 50 percent from its all-time high levels in 2021, according to Laidler.
‘However, the significant price increase of fintech AMTD Digital since its recent IPO demonstrates that speculative excesses persist in certain market segments.
Similar to the well-documented incidents of 2021 involving Gamestop and AMC, there are a large number of social media-connected investors seeking to profit from a large momentum trade in a relatively low-volume company.
A casual examination of the Reddit thread Wall Street Bets, which fueled the Gamestop phenomena, reveals that AMTD was not mentioned before yesterday. Consequently, what other factors could be fueling the share price explosion?
Even AMTD is uninformed. In a letter of appreciation to its investors, the company stated, to the best of its knowledge, “there have been no material circumstances, events, or other items relevant to our company’s business and operating activities since the date of our IPO.
It added that it was monitoring the market for any “abnormal or unexpected trading behavior.”
