A little-known Hong Kong-based fintech company has exploded on the New York Stock Exchange, rising more than 21,000% in less than three weeks.
Just two days ago, AMTD Digital was trading at a high of US$1679 after debuting on July 15 at a price of $7.80.
AMTD Digital is a branch of Hong Kong investment bank AMTD Idea Group and trades under the ticker symbol HKD.
It was founded in 2019 and, according to regulatory filings, brought in just over $25 million in revenue for 2021.
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Despite this, the company reached a market capitalization of over $425 billion at its peak this week, making it one of the most valuable companies in the United States and ahead of Disney, Coca-Cola and McDonald’s. .
The sudden push left many scratching their heads, with AMTD Digital itself even claiming that there appeared to be no “material circumstances” behind the push.
“In the period since our IPO, the company has seen significant volatility in the price of our ADSs and has also seen very active trading volume,” the company said in a statement.
“To our knowledge, there have been no material circumstances, events or other matters relating to the business and operational activities of our company since the date of the IPO.”
It looks like the stock has now started to fall, trading at US$1,100 at press time.
Some have drawn comparisons to the latest meme stock craze which saw a record rise in shares of companies like GameStop, with social media platform Reddit at the heart of the craze.
This means that many are once again wondering if the popular WallStreetBets subreddit is behind the rise, but it’s still unclear if that’s the case.
Brendan Ahern, chief investment officer at China-focused ETF provider KraneShares, said AMTD was “in some ways the perfect meme stock.”
“It’s a combination of a few things – a little float, probably short interest and now the stock angle even,” he told Forbes.
A quick search of Reddit’s WallStreetBets shows that AMTD has only been mentioned in the group for the past two days, with many furious at the suggestion that the page had something to do with the rise.
“The fact that all the news sources have pointed the finger at retail investors is horrifying. How in the name of God would they have enough money to start a company bigger than Disney? one user wrote.
“Nobody seriously believes that. The market capitalization has reached 500 billion… Do they seriously think that a group of part-timers at Wendy’s could do that?” another interviewee.
Another added: “I tried to buy it, the brokerage won’t let me, how am I contributing to this fiasco?”
The GameStock saga of 2021
In what seemed like a modern twist on the Robin Hood story, last year video game retailer GameStop became the battleground between rich and poor after Reddit users tried to put bankrupt hedge fund managers.
The company has seen a decline in physical sales due to the Covid-19 pandemic, with the stock hovering between US$3 (A$4) and US$10 ($13) for much of 2020 as a result.
Everything changed at the beginning of 2021 when the share price saw several consecutive days of increases.
At one point, its stock was more expensive than Apple, Facebook, Microsoft and Disney as it jumped 93% as its shares topped US$300 (A$393).
Individual investors, including many from the Reddit subgroup, drove the stock price higher using an app called Robinhood. It allows anyone to trade stocks commission-free.
Billionaire Elon Musk added more fuel to the fire when he tweeted a link to the Reddit message board, which saw GameStop’s stock nearly seven times its value from less than a month ago.
Overall, shares are up around 1,000% over a two-week period.
The feud began after the Reddit group reported that a hedge fund was planning to short GameStop shares.
As a result, users have decided to take revenge with what is described as a bull raid. They bought stocks before their price fell and quickly inflated its value.
This meant that all traders who bet on a decline in value lost large sums of money.
Hedge fund Melvin Capital was nearly ruined after making huge bets on the GameStop stock crash.
Originally published as Little-known stocks soar 21,000% on NYSE