- AMDD Digital is the newest meme stock
- Meme stocks were the craze during the pandemic when individual traders with a lot of time to spare jumped online and into stocks en masse.
- They found out. together, they could drive up stock prices and squeeze hedge funds to push stocks to extraordinary levels.
21,426% – that’s how much AMTD Digital, trading under the ticker symbol “HKD”, has risen since its July 15th IPO. In other words, if you had bought a single share of AMTD Digital at the IPO price of $ 7.80 per share and sold it at Tuesday’s closing price, up 184% for the day, you would have earned $ 1,671.
Shares in AMTD Digital’s parent company, AMTD Idea Group, a Chinese financial company traded under the ticker symbol “AMTD”, were up 525% over the past month and closed with a whopping 238% gain on Tuesday.
But if you’re not active on FinTwit, short for financial Twitter where users tweet about investment moves they’re making or Reddit’s famous Wallstreetbets forum you’ve probably never heard of it.
If so, welcome back to meme stock mania.
APDN shares versus HKD and AMTD
AMTD Digital and its parent company weren’t the only shares to post huge gains on Tuesday.
Applied DNA Sciences Inc, listed on Nasdaq under the symbol “APDN”, closed Tuesday up 311%. The company announced that it has initiated validation of the monkeypox virus polymerase chain reaction test, or PCR. If validated, it will submit the test for approval to the New York State Department of Health.
A state of emergency was recently declared in New York as monkeypox cases soared to 1,400. Currently, there are only five approved commercial laboratories testing for monkeypox contributing to major delays to results. So having another commercial lab test for monkeypox could change the rules of the game, which is why the stock surged on Tuesday.
Cases of monkeypox in every state:California, New York declare emergencies as the epidemic grows
However, there have been no recent major news announcements to help explain why AMTD Digital and AMTD Idea stock prices are exploding.
“To our knowledge, there have been no material circumstances, events or other matters relating to our company’s business and operations since the IPO date,” AMD Digital said in a statement Tuesday in which it thanked investors for its “performance. of price “.
And that’s why they fit the definition of meme stock perfectly.
What are meme actions?
Stock memes, born during the pandemic in 2020, are what you get by combining social media and investing in stocks.
People, largely stuck at home and bored with little to spend their stimulus checks on, decided to pass the time and dabble in the rising stock market, especially since trading was free on Robinhood’s platform. These investors, many of whom probably had little experience in financial markets, have scoured social media – places like Twitter, Stocktwits, Facebook, and Reddit – for ideas.
Once there, they found a bevy of people like them and a pot full of investment ideas. As they argued among themselves, some ideas caught on. RoaringKitty (aka Keith Gill) has been advertising GameStop stock on Reddit and in YouTube videos since 2019. During the pandemic, his musings attracted more and more attention from these bored and home-stuck new investors and by 2021 a revolution in trading had begun. .
What happened with GameStop?
Interest in GameStop is considered to be the first meme title, it has garnered momentum among individual or online retail investors. The stock was heavily short-sold by hedge funds, traded significantly below what people thought the stock was worth, and former Chewy CEO Ryan Cohen joined the board, which some thought could lead to a successful business breakthrough.
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That narrative led investors to come together to buy GameStop stock, which quickly pushed prices up, and hedge funds rushed to buy stock to cover their previous sales (called short-covering), causing prices to skyrocket.
Online investors have doubled their bets and trading has become extremely volatile with large swings by the hour. Some trading platforms, such as Robinhood and Schwab, stopped trading those names for their clients, which triggered a series of losses – first from hedge funds and then from retail traders – investigations and Congressional hearings into who he was. blame.
What other meme titles have surfaced?
After GameStop, encouraged online retailers found new titles like AMC and Bed Bath and Beyond to go viral on social media. Those stocks have seen similar roller coaster trading as online investors have used the same playbook. They have come together online to chart their collective shopping spree, which would cause prices to rise initially. That price hike would mean Wall Street investors having to buy stocks to hedge their short positions, which further strengthened the stock’s price and made retail investors gain as hedge funds lost money.
LOWER TIMES:Robinhood collapses as summer growth slowed as trading calmed down
LESSONS LEARNED:3 things all investors can learn from meme titles like GameStop, AMC, and Dogecoin
This was a game changer in trading. Retail investors saw themselves as kids, rejecting Wall Street suits and their algorithms, and a revolution was born. Wall Street was forced to take notice, and companies like VandaTrack began collecting data to analyze where the retail crowd was investing their money.
Medora Lee and Elisabeth Buchwald are personal finance and market reporters at USA TODAY.
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