Aug 3 (Reuters) - Shares of AMTD Digital plunged 40%
on Wednesday to snap an eye-popping rally fueled by retail
investors this week that briefly took the Hong Kong-based
fintech's market value past that of Facebook-owner Meta
The company's market capitalization closed above $300
billion in a 128% jump on Tuesday, reminding investors of the
meme stock mania last year that drove record rallies in shares
of companies such as GameStop and AMC.
The stock has risen about 21,000% since its July IPO, when
it listed at a price of $7.80. It was trading at $1014.98 on
"It sure looks a lot like a pump-and-dump," Nate Anderson,
founder of Hindenburg Research, said, adding that it does not
have a position in AMTD Digital. "It seems to have caught on
among retail investors, which is often the fuel for these
In a typical pump-and-dump scheme, investors create
artificial demand to boost companies' stock prices and then sell
their own shares at a profit causing prices to fall, saddling
others investors with losses.
AMTD Digital was also the most-mentioned stock on
Reddit.com, the social media platform central to the meme stock
craze of 2021.
The company said on Tuesday there was no material change or
event related to the company's business and operating activities
since the IPO date and that it was monitoring the share
The fintech firm, which provides loans and services to
startups in exchange for fees, has a low float and is tightly
controlled by parent company AMTD Idea.
AMTD Idea's shares also slid 4% after closing Tuesday with a
market value of $2.6 billion.
"(AMTD Digital) is clearly the newest meme stock with bands
of retail traders purchasing the stock at the same time, pushing
the price sharply higher," said Victoria Scholar, head of
investment at Interactive Investor.
There has been a similar, but smaller, surge in some other
recently listed U.S. companies, including Getty Images
which jumped over 200% since its debut on July 25.
"Should this market rebound have more legs, we expect retail
investors' appetite for speculative stocks to continue, as they
seek the opportunity to further scratch back the losses theyve
accumulated through the year," said Lucas Mantle, a data science
analyst at Vanda Research.
(Reporting by Bansari Mayur Kamdar and Medha Singh in
Bengaluru; Editing by Saumyadeb Chakrabarty)