- Shares of AMTD Digital are up as much as 18,670% since its initial public offering in July, and it has no idea why.
- AMTD Digital is a Chinese technology company with a market capitalization of $150 billion.
- Its parent company, AMTD Idea Group, rose more than 500% in Tuesday’s trading.
AMTD Digital’s stock is up as much as 18,670% since its initial public offering in mid-July in the absence of clear news, indicating that the rally is driven by the low-float nature of its outstanding shares and massive demand for the stock.
The Hong Kong tech company is trading on the New York Stock Exchange and pricing its IPO at $7.80 a share, which helped it raise $125 million in revenue. On Tuesday, the stock hit a high of $1,464.06 with a volume of just over 100,000 shares, briefly valuing the company at more than $150 billion.
In a statement on Monday, AMTD Digital thanked its investors for the successful completion of its initial public offering, which closed more than two weeks ago. The company also said that the trading of its shares in ADS “remains subject to our initial stabilization as underwriters have been given a green boot option.”
This means that the underwriters of the AMTD Digital IPO can exercise the option to purchase 2.4 million shares for $7.80 per share, or approximately $18.7 million. Insurers can then book an immediate gain by selling the shares on the open market, assuming their share price doesn’t fall 99% from current levels between now and August 15. At Tuesday’s high, this green shoe option is worth more than $2.8 billion. .
The insurers that will benefit from the AMTD Digital boom in the post IPO are AMTD Global Markets Limited, Livmore Holdings Limited, Eddid Securities and Futures Ltd. and Eddid Securities USA Inc, according to a statement issued by the company in July.
Curiously, AMTD Global Markets Limited is a subsidiary of AMTD Digital’s parent company, AMTD Idea Group. Shares of AMTD Idea Group, a China-based financial company, rose more than 500% in Tuesday’s trading. AMTD Idea Group owns 97.1% of AMTD Digital’s shares outstanding as of July 15, according to an SEC filing.
“To our knowledge, there have been no material circumstances, events or other matters relating to our company’s business and operating activities since the date of the IPO,” AMTD Digital said in its Monday statement.
AMTD Digital has a low stake to float only 19 million shares. This means that when there is a great demand for the stock, and there are few sellers, the stock price is trending vertically. Some of these purchases appear to be retailer-driven. According to data from Fidelity, AMTD Idea Group’s stock was the most traded stock on Tuesday among its client base.