- AMTD Digital is a Hong Kong-based digital investment bank that held its IPO on July 15.
- HKD hit the market at a share price of $7.80 and reached over $2,000 per share this week.
- The sudden increase of AMTD Digital’s share price surpassed meme-stock rallies like GameStop’s in January 2021.
What Caused HKD’s Abnormal Trading Activity?
On July 15, Hong Kong-based AMTD Digital (HKD) held an initial public offering (IPO).
During its IPO, the investment bank sold about 16 million ADSs (American depositary shares) for about $7.80 each, raising roughly $124.8 million.
However, just over two weeks after its IPO, AMTD Digital’s share price soared past $2,000, an impressive 12,000%-plus gain.
Figure 2: HKD stock performance on August 2.
Google Finance
Why has HKD soared so high, so fast? Not even AMTD Digital itself understands. .
According to the company, there are no material circumstances or events connected to its business that could justify such volatility. AMTD also said it is closely monitoring any abnormalities in the stock’s trading activity.
To get an idea of how weird this is, consider the company’s current market cap of $137.3 billion. AMTD Digital is a subsidiary of AMTD IDEA Group (AMTD) – Get AMTD IDEA Group American Depositary Shares each representing one Class A Report — which has a market cap of only $3.4 billion.
Figure 3: AMTD Digital’s market cap on August 2.
Yahoo Finance
One way or another, HKD’s share-price frenzy will somehow come to an end.
In a statement, the company noted that its American depositary receipts that are trading on the NYSE are still undergoing an “initial stabilization period.”
Underwriters have been granted a green-shoe option, which can be exercised within 30 days of the IPO. This would allow the purchase of an aggregate of 2,400,000 additional ADSs at the IPO price.
Trading Higher Than a Meme Stock
The increase in AMTD Digital’s share price was so large that it exceeded even GameStop‘s (GME) – Get GameStop Corporation Report 1,700%-plus rise from January 11 to January 29, 2021.
GameStop’s insane trading activity in January 2021 was motivated by other relevant factors at that time. Reddit users on forums like r/wallstreetbets built a foundation for GameStop’s short squeeze to suddenly raise the share price.
Even though there is no evidence that the HKD price spike originated from a short squeeze, its trading activity drew attention to the stock.
On August 3, AMTD Digital was among the most talked-about stocks on Reddit.
Figure 4: Trending stocks on Reddit on August 3.
Apewisdom.io
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)