IG North America CEO JJ Kinahan said Friday that market participants should keep the “good perspective” when investing in stocks like AMTD Digital (NYSE: HKD), which has soared more than 32,000% in less than a month amid a flurry of interest from retail traders.
Speaking to CNBC, the head of e-commerce provider IG Group’s North American unit called the shares “lottery tickets” and warned people who buy meme shares not to view them as potential long-term investments.
“It’s not really an investment. It’s an attempt,” he said.
Kinahan added: “If you’re playing like you’re playing a lottery ticket, that’s fine…if you’re playing this saying you’re investing by playing in these stocks, well, that’s just a terrible premise in the game. together .”
The CEO of IG North America called meme stock trading “fun” but “not exactly healthy,” although he sees some long-term value in the process, in that it may interest people. young people to the broader stock market, which could lead to more constructive investment habits in the future.
“If this is the type of activity that needs to get young people into the market so that they will hopefully continue to participate in their 401(k), then I guess the end justifies the means,” said he declared.
HKD, a Hong Kong-based digital entertainment platform developer, went public in July via an IPO at a price of $7.80 per share. It immediately caught the market’s attention, closing its first trading session at $27.80.
Eventually, the stock peaked above $2,500 on August 2. This represented an increase of more than 32,000% from its initial IPO price and the market capitalization of the company was in the hundreds of billions of dollars. At its peak, the company had a market capitalization comparable to companies like Walmart and Procter & Gamble.
HKD came out of this peak. With precipitous declines over the past few days, shares closed Thursday at $800.
The recent HKD trade brought back memories of the meme stock frenzy, which pushed names like GameStop (GME), AMC (AMC) and Clover Health (CLOV) to spectacular heights.
For a record on one of those quirky meme stocks, AMC fell about 9% in Thursday’s premarket action on quarterly earnings and the declaration of a dividend.