It’s not so bad being a bubble stock after all

AMTD Digital

04/08/2022 05:57

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Lauren Silva Laughlin
    NEW YORK, Aug 3 (Reuters Breakingviews) - At $310 billion
AMTD Digital  HKD.N  is worth roughly 10 Twitters  TWTR.N ,
almost four Targets  TGT.N , one-and-a-half Walt Disneys
 DIS.N , or three-quarters of a Meta Platforms  FB.O . The Hong
Kong-based digital-platform company, created by local
financial-services firm AMTD Idea  AMTD.N , is the latest firm
whose shares have been fueled by irrationally exuberant
investors – be it the meme-stock craze that swept up businesses
from GameStop  GME.N  to AMC Entertainment  AMC.N , or other
bubble-like market mentalities that gave massive boosts to
Robinhood Markets  HOOD.O , Microstrategy  MSTR.O  and the like.
Sure, the air has come out of most of the hype – but it was
still worth it. 
    AMTD’s executives will be hoping for a similar outcome.
After more than doubling again on Tuesday, its shares now trade
more than 215 times higher than when they listed on the New York
Stock Exchange less than three weeks ago. Parent AMTD Idea has
been riding its subsidiary’s coattails for the past few days,
jumping roughly five-fold since late last week. There’s no
logical business reason for such a performance. AMTD Digital https://ir.amtdigital.net/investor-news/investor-news-details/2022/AMTD-Digital-Inc.-Thank-you-note-to-investors-and-our-response-to-our-latest-ADS-price-performance/default.aspxadmitted
 as much in a thank-you statement, saying that there were “no
material circumstances, events nor other matters” since  its
initial public offering. 
    In the end, it might not matter. While AMC’s stock price is
down more than 70% from its high, at almost $17 a share it is
still more than double its pre-pandemic value. Shares of
Microstrategy, the analytics company which bought almost 130,000
bitcoin at an average price https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/events-presentations/Q2-2022_microstrategy-earnings-presentation.pdf
 of nearly $31,000, now worth a quarter less, have benefitted a
similar amount start-to-finish. GameStop, effectively a penny
stock pre-pandemic, trades at around $35 a share.
    Robinhood Markets might appear to be a loser: The trading
platform that partly enabled these stock crazes said on Tuesday
it was laying off more than a fifth https://blog.robinhood.com/news/2022/8/2/a-message-from-our-ceo-and-co-founder-vlad-tenev
 of its workforce, and its shares are worth a fraction of their
listing price a year ago. Still, the company run by Vlad Tenev
timed the market well, raising $2 billion at a valuation
 urn:newsml:reuters.com:*:nL1N2YE29W of $32 billion. 
    As with these other companies, some investors who have
bought AMTD in the past month will undoubtedly lose money. But
the company is likely to end up being better off for its 15
minutes of fame. 
    Follow @thereallsl https://twitter.com/thereallsl on Twitter
    
    CONTEXT NEWS
    Shares of AMTD Digital, a Hong Kong-based digital solutions
company, closed at $1,679 apiece on Aug. 2. It listed shares on
the New York Stock Exchange in an initial public offering on
July 15 for $7.80 each. 

 (Editing by Antony Currie and Sharon Lam)
 ((For previous columns by the author, Reuters customers can
click on  SILVA/ 
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe
 | Lauren.SilvaLaughlin@thomsonreuters.com))