HKD, AMTD, WTF? The stock you haven’t heard of that grew 30,000% in 2 weeks
We’ll establish the most important thing up front, before we get into this situation: it’s about as risky as stocks. This stock just went public, is based in a foreign country, and ran 30,000% in two weeks on very low volume. Translation: Please don’t read this and conclude, “Wow, what a terrific stock that I should definitely buy!” – It’s exactly NOT what we are saying here.
Alright, the disclaimer is over. Let’s see what’s going on in (HKD) .
AMTD Digital (HKD): What are they doing?
AMTD Digital is a Hong Kong-based investment banking firm that has created a digital platform called “AMTD SpiderNet”. AMTD calls SpiderNet a “metaverse” ecosystem and currently it’s mostly used by fintech start-ups and internet influencers. Oh, what is it? Sounds vague, you say? No worries, check the AMDD website to clear up all your confusion.
If the italics weren’t clear enough: we’re being sarcastic – the SpiderNet website’s explanation is extremely vague.
What box to glean from the website is:
- AMTD provides investment banking and asset management services to clients on an international basis
- AMTD Digital raised $125 million in its New York IPO – the largest listing by a Chinese company in 2022
- It owns the SpiderNet platform
That’s really all the website explains. After going through a few press releases, we were able to determine that the SpiderNet platform intended to provide capital and technology to digital startups, as well as provide networking services to other digital startups . In turn, SpiderNet collects a fee from its members, from which it derives almost all of its revenue.
In short: AMTD Digital is a Hong Kong-based fintech game that basically provides loans and services to startups in exchange for fees.
Does this justify AMD Digital quickly becoming the 26th largest stock in the US by market capitalization? Let’s get a bit more information about the stock before making that judgment.
Scroll to continue
Ready to start trading techniques? Try weekly rebel. Ride the waves of market momentum with two actionable trade ideas designed to capture technical breakouts and breakdowns – delivered to your inbox every week.
The Rise of AMTD Digital Stock
Since posting that tweet, HKD has risen to the 13th largest market capitalization, overtaking (WMT) – Get the report from Walmart Inc..
That’s the juicy stuff. Apart from the corners of FinTwit and Wallstreetbets, AMTD Digital is relatively unknown. We will highlight it:
- In its early days, AMTD Digital had a reasonably high price-to-earnings ratio of 18, higher than the average Chinese fintech ratio of around 5.
- Currently trading at $2,555.30, the P/E ratio has risen to 13,160.
- The market capitalization is currently 386,745 million, which puts it just below (XOM) – Get Exxon Mobil Corporation report in size, and above companies like Walmart, (SAY) – Get The Walt Disney Company Reportand McDonald’s.
- According to a recent filing, AMTD Digital has only 51 employees.
- AMTD Digital is owned by AMTD Idea Group (AMTD), which has also grown relatively rapidly.
- In its second year of operation (2020), AMTD Digital’s revenue grew more than 10x.
- Following this impressive growth, annual revenue has slowed significantly, falling to 17% in 2021.
- In 2022, revenue growth fell to just 4% according to its latest SEC prospectus.
- AMTD Digital operates with relatively high margins – 88% in the last fiscal year.
- However, included in this profit margin calculation are the earnings from his stock investments.
- AMDD Digital’s meteoric run took place against a backdrop of declining volume that was already low to begin with.
Summarizing the Mysterious Race of AMDD Digital (HKD)
If we were to give the shortest possible summary of recent AMTD movement, we would say that nothing about this race makes traditional “sense”.
- The low volume makes sense given the massive run.
- The P/E ratio is absurdly high compared to its sector, and indeed the rest of the market.
- Market cap doesn’t make sense given that AMDD Digital is a company few people have heard of, and is also (so far) the 16th largest stock by market cap in the US.
- The 10X revenue slowdown to just 4% doesn’t justify the race either.
If it seems that we are critical: we are. You should be too. The stock market can be a lucrative tool for accumulating wealth, but it can also trap investors and traders who aren’t careful with their investments. Often, if something seems too good to be true, it probably is. In other words, as Market Rebellion co-founder Pete Najarian often says, “discipline dictates action” – and disciplined traders do their research.
Trade smarter. Start looking for unusual option activity today.