New meme stock AMTD Digital slides after briefly overtaking Facebook-owner Meta

It has risen about 21,000% since its July IPO, when it listed at a price of $7.80

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Photo: Reuters

By Reuters

Published: Thu 4 Aug 2022, 8:58 AM

On Wednesday, shares of AMTD Digital plunged 40 per cent to snap an eye-popping rally fuelled by retail investors this week, that had briefly taken the Hong Kong-based fintech's market value past that of Facebook-owner Meta Platforms.

The company's market capitalisation closed above $300 billion, in a 128 per cent jump on Tuesday, reminding investors of the meme stock mania last year, that drove record rallies in shares of companies such as GameStop and AMC.

The stock has risen about 21,000 per cent since its July IPO, when it listed at a price of $7.80. It was trading at $1014.98 on Wednesday.

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"It sure looks a lot like a pump-and-dump," said Nate Anderson, founder of Hindenburg Research, adding that it does not have a position in AMTD Digital.

"It seems to have caught on among retail investors, which is often the fuel for these situations."

In a typical pump-and-dump scheme, investors create artificial demand to boost companies' stock prices and then sell their own shares at a profit, causing prices to fall, and saddling other investors with losses.

AMTD Digital was also the most-mentioned stock on Reddit.com, the social media platform central to the meme stock craze of 2021.

On Tuesday, the company said that there was no material change or event related to the company's business and operating activities since the IPO date, and that it was monitoring the share volatility.

The fintech firm, which provides loans and services to startups in exchange for fees, has a low float, and is tightly controlled by parent company AMTD Idea.

AMTD Idea's shares also slid 4 per cent after closing on Tuesday with a market value of $2.6 billion.

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"[AMTD Digital] is clearly the newest meme stock with bands of retail traders purchasing the stock at the same time, pushing the price sharply higher," said Victoria Scholar, head of investment at Interactive Investor.

There has been a similar, but smaller, surge in some other recently-listed US companies, including Getty Images, which jumped over 200 per cent since its debut on July 25.

"Should this market rebound have more legs, we expect retail investors' appetite for speculative stocks to continue, as they seek the opportunity to further scratch back the losses they've accumulated through the year," said Lucas Mantle, a data science analyst at Vanda Research.

Reuters

Published: Thu 4 Aug 2022, 8:58 AM

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