We will immediately establish the most important thing number one, before entering this situation: this is the higher risk than that of stocks. This stock has just been IPO, is based in a foreign country and has hit 30,000% in two weeks on very low volume. Translation: Please don’t read this and conclude: “Wow, what a great stock I should definitely buy!” – This is absolutely NOT what we are saying here.
Ok, the disclaimer is over. Let’s take a look at what’s going on (Hong Kong) .
AMDD Digital (HKD): what do they do?
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 is currently used primarily by fintech start-ups and Internet influencers. Oh, what’s that? Sounds vague you say? No problem, check the AMTD website to clarify all your confusion.
If the italics weren’t clear enough: let’s be sarcastic – the SpiderNet website explanation is extremely vague.
What Power to be collected by the website is:
- AMDD 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 of a Chinese company in 2022
- It owns the SpiderNet platform
That’s really all that the website explains. After reviewing some press releases, we were able to determine that the SpiderNet platform intends to provide capital and technology to digital startups, as well as providing networking services to other digital startups. In turn, SpiderNet collects a share from its members, and this is where it gets almost all of its income.
In short: AMTD Digital is a Hong Kong-based fintech company that essentially provides loans and services to startups in exchange for commissions.
Does it justify that AMTD Digital has quickly become the 26th largest US stock by market cap? Let’s get a little more information on the title before making this judgment.
Scroll to Continue
Ready to start trading with technical data? Try Ribelle weekly magazine. Ride the waves of market momentum with two actionable business ideas designed to capture blasts and technical failures, delivered to your inbox every week.
The rise of AMDD digital stocks
Since this tweet was released, HKD has risen to 13th stock by market cap, outperforming (WMT) – Get the Walmart Inc report.
This is the juicy stuff. Aside from the corners of FinTwit and Wallstreetbets, AMTD Digital is relatively unknown. We will shed some light on it:
- On its debut, AMTD Digital had a reasonably high P / E ratio of 18, higher than the Chinese average fintech ratio of ~ 5.
- Currently trading at $ 2,555.30, the P / E ratio has risen to a whopping 13,160.
- The market capitalization is currently 386.745 million, placing it just below (XOM) – Get the Exxon Mobil Corporation report in size, and above companies like Walmart, (DIS) – Get the Walt Disney Company reportand McDonald’s.
- According to a recent filing, AMDD Digital has only 51 employees.
- AMTD Digital is owned by AMTD Idea Group (AMTD), which also had a relatively rapid rise.
- During its second year of operation (2020), AMDD Digital’s revenue grew more than 10-fold.
- Following this impressive growth, annual revenue slowed significantly, dropping to 17% in 2021.
- In 2022, revenue growth dropped to just 4% according to its most recent SEC prospectus.
- AMTD Digital operates at relatively high margins – 88% in the last fiscal year.
- However, earnings from your holdings are included in the profit margin calculation.
- AMTD Digital’s lightning-fast run was against the backdrop of falling volume that was already low in the beginning.
Summing up the mysterious ride of AMTD Digital (HKD).
If we were to provide the shortest possible summary of AMTD’s recent movement, we would say that nothing about this race makes traditional “sense”.
- The low volume makes sense given the massive ride.
- The P / E ratio is absurdly high compared to its sector, and also to the rest of the market.
- Market cap makes no sense as AMTD Digital is a company few people have ever heard of and is also (for now) the 16th largest stock by market cap in the US.
- Even the slowdown in revenue from 10x to just 4% doesn’t justify the rush.
If it looks like we are critical: we are. You should be too. The stock market can be a profitable tool for accumulating wealth, but it can also trap investors and traders who are not careful about their investments. Often, if something sounds 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 alternative activities today.