AMTD Digital: Mysterious Stock Gets Bigger Than Disney

Key Insights

• AMTD Digital touched highs at $2555 a few days after an IPO priced at $7.80.
• There were no news to move the stock. 
• In the longer-term, AMTD Digital will fall from current levels. 

Is Meme Stock Trading Back In Fashion?

While some traders have already forgotten about meme stocks, miracles still happen in the market. ADS (American Depositary Share) of AMTD Digital, a digital solutions platform from Hong Kong, soared from $7.80 to $2555 (!) after the IPO. The stock has already pulled back towards the $1000 level, but the rally is still enormous.

There were no news to trigger the huge rally. As a response to the abnormal price action, AMTD Digital published a “thank you note” to investors on its website. The company stated: “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.”

Even after the major pullback, AMTD Digital has a market cap of more than $203 billion. AMTD Digital is more expensive than Oracle, Nike, Disney, or McDonald’s!

What’s Next For AMTD Digital?

Not surprisingly, traders from social media forums like WallStreetBets have already noticed the stock. However, there were no active discussions at the start of the rally, so it is not clear what served as the key catalyst behind the move.

Traders should note that AMTD IDEA is a majority shareholder of AMTD Digital. Shares of AMDT IDEA soared on August 2, but quickly found themselves under pressure and started to pull back. Judging by the market action in AMTD IDEA, traders do not expect that the gains in AMTD Digital will hold, as the market capitalization of AMTD IDEA is just $1.93 billion.

This is not surprising as a little-known company with yearly revenue of less than $200 million has suddenly received a valuation that exceeds the market cap of huge global corporations.

Trading in AMTD Digital will remain highly volatile in the upcoming days. In the longer-term, the stock will move towards the IPO valuation. Traders who want to sit through all the volatility should note that they are risking losing most of their money.

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