The current stock market sensation is both crazy and mysterious: The share price of a small Hong Kong company, AMTD Digital, once rose 22,000% after its listing on the New York Stock Exchange on July 15.
An investor’s dream with the potential for one hell of a jackpot: launched at a price of $7.8, the promotion rose to $2,555 on August 2nd, only to decline somewhat over the following days but remained at exceptionally high levels.
A rapid rise enough to put the mysterious little company, valued at $203 billion, as the fifth most valuable financial institution in the world – better than Goldman Sachs, Wells Fargo or Morgan Stanley, according to Bloomberg.
There is a catch, though, if there is at least a catch: no one understands the why and how of such a sudden explosion. As noted by Motherboard telling the confusion and stunned surprise of retail investor from Reddit Given the phenomenon, the company’s activities are almost skillfully vague.
Placed under the umbrella of AMTD Group, it rubs shoulders in a complex arrangement with other entities with results almost as brilliant as investment bank AMTD Idea Group, whose share price is up 458% since July 15. The official website talks about financial services, marketing, fintech, or an ecosystem called “AMTD SpiderNet” that AMTD Digital would be at the core of.
What’s more, its results are modest to say the least: In its last fiscal year, it only made $25 million in revenue. Its organizational chart is complex, Bloomberg notes, but points to one man, Calvin Choi. Choi, a Hong Kong native but Canadian citizen, is the head of AMDD Idea Group, in which he owns 32.5%, and doesn’t have the best reputation.
Earlier this year, Hong Kong regulators banned Choi from the securities industry for two years for failing to disclose conflicts of interest in transactions he worked on when he was at UBS.
Crucial to Choi’s installation at the head of this strange empire, investors even for a time put up banners in the Chinese city publicly attacking the practices of her ex-colt.
Asked about these strange movements, AMTD Digital got in touch and made sure of it“To his knowledge, no circumstances, events or other matters relating to the business and operational activities of our company have arisen since our company’s IPO.”.
The Wall Street Journal and Business Insider attempt an explanation: There are very few tradable stocks on the market, 19 million, making their prices extremely volatile. Few actions, great demand: This could be the recipe for a somewhat artificial success, many observers speak of a typical maneuver pump and drain.
“When only a very small number of shares are available for trading in the market, their price can be particularly volatile. They can be the subject of massive movements and possible manipulation., explains Nathan Anderson, investor and founder of Hindenburg Research. So be careful with this new giant: he seems to have very fragile clay feet.