You Thought Meme Stocks Were Dead? Meet AMTD Digital

Rachel Curry - Author
By

Aug. 4 2022, Published 11:07 a.m. ET

About a year and a half after the GameStop (GME) short squeeze, meme stocks live on. This time, the target is an unsuspecting AMTD Digital (HKD), a Hong Kong company that debuted on the NYSE mid-July and has since soared thousands of percentage points.

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Naturally, the frenzy is fueled by Reddit loyalists of the forum WallStreetBets, but the rally is taking things further than even GameStop itself could have imagined.

AMTD Digital stock sets new meme stock highs.

AMTD debuted in the U.S. with its ADRs (American depositary receipts) at $7.80 per share in mid-July. By Aug. 2, HKD stock closed at $1,679 per share. That’s a market capitalization of $310 billion.

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At its peak, AMTD gained 21,000 percent, though it has since cooled mildly. For reference, GME gained about 1,625 percent over the month of January 2021. AMTD blows it out of the water.

What is AMTD Digital all about?

AMTD Digital is headquartered in Singapore and operates out of Hong Kong. It’s a digital investment bank that calls itself a “one-stop digital solutions platform.” It raised a fairly modest $125 million for its IPO (which still managed to hit China’s largest IPO this year).

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AMTD Chairman Calvin Choi is reaping the rewards of a successful post-IPO period. His AMTD holdings were worth as much as $36.8 billion at market close on Aug. 3.

The AMTD rally isn't driven by short selling or fundamentals — so what is it?

AMTD issued a press release on Aug. 2 to address the unprecedented shareholder inflow. According to the company, “to our knowledge, there are no material circumstances, events nor other matters relating to our Company’s business and operating activities since the IPO date.”

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Traders on WallStreetBets have been gathering to rally, but others are skeptical. One user wrote, “How can a company that is a subsidiary of a company be worth over 100 times it with less sales by a wide margin?” In January, AMTD International acquired a $2.64 billion majority stake in AMTD Digital.

The stock is still in its post-IPO lockup period and isn't known to be substantially shorted by any hedge funds, so it isn't clearly a short squeeze like we saw with GME and other meme stocks.

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If AMTD fundamentals and short selling aren't the answer for the mob behavior we’re seeing here, what is?

Frankly, nobody quite knows. But there isn't a shortage of theories — ranging from money laundering between China and the U.S. to low float with concentrated institutional ownership.

What’s clear is that HKD stock remains volatile, and its unsustainable growth built on a shaky foundation could come back to bite it in the butt. In contrast, AMTD’s expansion is undeniable — it has even committed to establishing a metaverse presence, a unique take for an investment bank. Even as the metaverse hype cools and a potential recession looms, many companies remain attached to the notion that it’s the way of the future. For now, that’s working out for AMTD’s HKD stock, which sits at a value of $900.00 mid-morning on Aug. 4.

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