AMTD stocks causing déjà vu
Traders see shades of GameStop’s rise
Just how much is AMTD Digital stock, traded under the ticker symbol HKD, up since its July 15 IPO? The answer: over 17,000%.
Put differently, if you bought just one share of AMTD Digital at its $7.80 IPO price and sold it at Tuesday’s closing price, $1,679, you would’ve made $1,671. Shares were down over 16% Wednesday after closing 184% higher on Tuesday.
Shares of AMTD Digital’s parent company, AMTD Idea Group, a Chinese financial company traded under the ticker symbol AMTD, are up nearly 500% over the past month and closed a whopping 238% higher on Tuesday. It was the most bought company on Fidelity on Tuesday. Shares were down around 3% Wednesday afternoon.
If you aren’t active on FinTwit, shorthand for financial Twitter where users tweet about investment moves they’re making, or Reddit’s famous Wallstreetbets forum, you may never have heard of AMTD.
Though, unlike with GameStop, these groups may not have as big of an influence on the stock price.
APDN stock versus HKD and AMTD
AMTD Digital and its parent company weren’t the only stocks to experience enormous gains on Tuesday.
Applied DNA Sciences Inc., which is listed on the Nasdaq under the ticker symbol APDN, closed 311% higher on Tuesday. The company announced that it initiated validation of its monkeypox virus polymerase chain reaction, or PCR, test. If validated, it will submit its test for approval to the New York State Department of Health. Shares were up an additional 50% Wednesday afternoon.
A state of emergency was recently declared in New York as monkeypox cases soared to 1,400. There are only five approved commercial labs that test for monkeypox contributing to major time lags for results. So having another commercial lab test for monkeypox could be a game changer, hence the stock surge on Tuesday.
However, there weren’t any recent major news announcements that help explain why AMTD Digital and AMTD Idea share prices are exploding.
“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,” AMTD Digital said in a Tuesday statement where it thanked investors for its “price performance.”
HKD was the second most popular ticker mentioned across Wallstreetbets over the past 24 hours as of Wednesday afternoon, according to data from Quiver Quantitative, an alternative data provider that tracks activity in the Reddit group.
Some users posted memes about getting a bite of the stock’s action. But several urged others to stay away from the two companies which are listed on the NYSE via American depositary receipts, or ADRs.
ADRs enable foreign-owned companies to IPO on U.S.-based stock exchanges, in some cases, without having to comply with all of the regulations the U.S. Securities and Exchange Commission imposes on U.S.-owned publiclytraded companies.
Many Reddit users replied to the above meme alleging that AMTD Digital’s performance is attributable to an insider trading scheme given that its parent company owns 97.1% of AMTD Digital’s outstanding shares, according to its IPO filing with the SEC.
The SEC declined to comment on whether it was aware of insider trading or if it plans to launch an investigation. The agency did not provide a reason for why it declined to comment.
Even though there’s no apparent reason for AMTD Digital and AMTD Idea’s enormous gains, they may not be meme stocks.
What are meme stocks?
Meme stocks, born during the pandemic in 2020, are what you get when you combine social media and stock investing.
People, largely stuck at home and bored with little to spend their stimulus checks on, decided to pass time and dabble in the surging stock market, especially since trading was free on platforms such as Robinhood. Many of these investors scoured social media – places like Twitter, Stocktwits, Facebook, and Reddit – for ideas on what to invest in.
Once there, they found a bevy of people just like themselves and a pot full of investment ideas. As they discussed them among themselves, certain ideas caught on. RoaringKitty (aka Keith Gill) touted GameStop shares on Reddit as well as in YouTube videos since 2019. During the pandemic, his musings garnered more and more attention from stuck-at-home retail investors and by 2021, a revolution in trading had begun.
What other meme stocks emerged?
After GameStop, emboldened retail traders looked for new investment opportunities and began to trade shares of AMC and Bed, Bath and Beyond. Those stocks saw similar rollercoaster trading as online investors employed the same playbook.