THE action of AMTD Digital is one of the most valued in the world, traded at more than 400 times its last profit of the fiscal year, according to information from the Bloomberg agency published in Valor Econômico. For comparison, the Goldman Sachs stock (GSGI34) rose sixfold over this period.
AMTD Digital’s share, listed on the New York Stock Exchange, has gained 2,221% for the five weeks to Tuesday (16), since its listing on the US stock market. The company rivals the rise of GameStop Corp.
Both assets appear to have been fueled by retail investors to “squeeze” those who trade with Shorts, says the Bloomberg report.
shorts are strategies that the investor uses to profit from the fall of an asset. Thus, Tellimer LTD called AMTD Digital a “the mother of all shorts”.
The strong bullish move is impressing Wall Street after surpassing 32,000% at its peak. Thus, the trajectory of the Hong Kong financial services company was extremely volatile on the US Stock Exchange, after landing on the NYSElisting the paper at $7.80 on IPO (initial offering of shares).
In early August, the stock was down more than 90% from its peak.
However, it can be risky to bet against the stock’s rally due to the small free float and the low trading volume of AMTD, which makes leasing shares expensive for short traders.
In addition, the stock has been extremely volatile and may end up having the opposite behavior of what investors want.
“As a professional short seller, you want to be a mile away from that,” said Soren Aandahl, of Blue Orca Capital, in a text in Valor Econômico. “It’s so extremely volatile that it’s really dangerous.”
At one point, AMTD was worth about $400 billion on paper. To give you an idea, this figure exceeds Goldman Sachs Group Inc. and JP Morgan Chase & Co.
However, other companies from China also posted gains. Magic Empire Global, for example, saw its stock soar by nearly 6,000% in just a few days.
AMTD Digital said it is “monitoring the market for trading abnormalities” and is not aware of “circumstances, events or other material matters” that may be affecting the shares.
For Tellimer analyst Nirgunan Tiruchelvam, AMTD “seems to be a very curious case”.
The participation in AMTD Digital’s “short” in the actions in circulation is less than 0.1%, according to Markit data.