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Are the Reddit traders at it again?
After listing in New York, a small, obscure Hong Kong company called AMTD Digital (HKD) exploded by an insane 14,000% before filing for bankruptcy this week, which then led to sporadic rallies in American companies.
Over the past week, the AMC theater chain is up 64%. Video games retailer GameStop GME — caught in last year’s meme mania — is up 26%. And struggling home furnishings retailer Bed Bath & Beyond BBBY (BBBY) almost doubled.
The sudden, unfounded interest in these companies has fueled speculation of a trader return to Reddit and even market manipulation. But the real culprit could be here a simple typo.
AMTD is not an action meme
Let’s take a closer look at the rise and fall of AMTD.
AMTD is a three-year-old Hong Kong-based fintech company that debuted on the New York Stock Exchange on July 15. On the day of the listing, the shares were trading at $7.8. At its intraday high last Wednesday, the stock was trading at $2,555.
Consider how insane the current price is:
- At $2,555, AMTD’s price equates to a market cap of $470 billion, making the company one of the top 10 most valuable companies in the world with just 50 employees, beating out giants like Visa V, Tencent and Meta.
- Meanwhile, the company generated just $22 million in revenue last year. That means the stock was trading at an ap/e of 15,000 at its peak. That’s 15x more expensive than Tesla’s “highly valued” TSLA stock.
But while AMTD has all the hallmarks of a meme — it’s small, obscure, and insanely overhyped — there’s a quirk that suggests it doesn’t have to be. It has to do with trading frequency.
As Bloomberg columnist Matthew Brooker pointed out:
“The peak of the GameStop fever early last year was accompanied by a sharp surge in volume. For example, on January 22, 2021, when the price rose by 51%, the number of shares changing hands reached 788.6 million. That’s more than triple the stock available for trading, known as the float. In comparison, AMTD Digital’s volume peaked on July 28 at 2.4 million shares, less than 12% of total listed volume. “
Most likely, AMTD is just a big misconception, and there’s a reasonable theory that can explain it: misguided tickers.
As Brooker speculates, “Could a mistaken identity have played a part? AMTD Digital has an interesting stock ticker – HKD, better known as the abbreviation for the Hong Kong Dollar. Meanwhile, AMTD’s Idea brand is AMTD — an oddly close AMD to Advanced Micro Devices Inc., a $158 billion company with a much larger public market that’s up 33% since early July.
It would not be the first time. Consider Zoom Technologies’ 70,000% surge in 2019 when Robinhood investors mistook it for Zoom Video Communications, which operates the world’s leading video conferencing platform. 1.
However, the recent “mementum” in some stocks is not a prelude to a new meme-stock craze. This is most likely just a self-fulfilling prophecy that will wear off once the market picks up again.
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