“We are not aware of any material changes in circumstances, events or other matters relating to our business that have occurred since the IPO,” AMTD Digital said in an Aug. 2 press release. A justification is being sought for the almost rapid development of the share price of the Hong Kong software developer, which went public on July 15 in New York.
On that day in July, the company placed 16 million depositary receipts on Wall Street at a price of $7.80. On August 2, the price of the bills reached a temporary high of $ 2550.30. That means a price increase of 32,696 percent within two weeks. On the same day, it ranked the company as the 13th most valuable company in the world with a market cap of $386.7 billion. That made it more valuable than oil company Exxon Mobil, the Walt Disney Corporation, or retailer Walmart.
P/E of 13,160
The price-to-earnings (P/E) ratio of the notes was 13,160. That means it took the company 13,160 years at its current earnings per share to “pay” the price of a share. In the meantime, the price has fallen back to around $1100, which is still a handsome plus compared to the IPO.
AMTD is a manufacturer of software solutions, including for financial companies and advertising purposes. On its website, it markets itself as a provider of digital platforms for the industries mentioned. AMTD also maintains its own investment fund that invests in technology companies. In summary, the company can be described as a fintech that provides financial services and software.
AMTD Digital has existed since 2019, has 51 employees according to a recent announcement and is part of the AMTD Idea Group. After initially high growth, the company only increased its sales by 17 percent compared to the previous year. As AMTD reported to the US Securities and Exchange Commission, the company has grown 4 percent so far this year. Given the high P/E, which was 5855 on Aug 3rd, AMTD’s financials don’t seem to justify the price action.
“So fraud is on the agenda”
Just as curious: the notes were hardly traded at the beginning of August. While more than 300,000 transactions were recorded daily in mid to late July, they changed hands 1,000 to 4,000 times a day at the beginning of August. American media suspected another coordinated action by private investors in social media such as Reddit or Twitter to be behind the steep rise in the shares. In early 2021, users of the Reddit forum Wallstreetbets were partly responsible for record price gains in the shares of the video game retailer Gamestop.
If you take a look at Wall Streetbets, the users are just as ignorant as AMDT itself. Astonishment about the attributions makes the rounds. “We were that?! Why wasn’t I invited?” asks a user angrily.
You can occasionally see contributions from users who have managed to get started at relatively low prices in the past few weeks. So far, however, there has been no celebration and no complaints about the success of the forum. The “monkeys”, as users like to call themselves, are more likely to be looking for an explanation, just like other observers. “I understand. So fraud is on the cards,” one user headlines, attaching a candlestick chart of AMTD securities with the barely-there trading volume to the post.
