AMTD Digital Tumbled Over 41% in Morning Trading

AMTD Digital Tumbled Over 41% in Morning Trading.

AMTD Digital is a unit of AMTD IDEA Group, which became the latest stock sensation, skyrocketing days after listing on the New York Stock Exchange, was recently falling Wednesday.

AMTD Digital, a nearly three-year-old business controlled by a Hong Kong-based financial institution, went public on July 15 after selling 16 million American Depositary Shares at $7.80 apiece, for a total of $125 million in proceeds. On Tuesday, the shares—trading under the ticker HKD—closed at $1,679, after hitting a high of $2,555.30 earlier in the day.

Trading was halted 18 times during the day due to the extreme volatility. It was recently down about 41%, at prices under $1,000 per share, on Wednesday morning, with trading again paused earlier in the session.

At Tuesday’s close, AMTD Digital had a market capitalization of about $310 billion. The company, which provides digital financial services to individuals and businesses in Asia, reported $24 million in net profit in the 10 months through the end of February 2022,according to its listing prospectus.

In a press release Tuesday, AMTD Digitalthanked investors for the recent completion of its IPO. It acknowledged the “significant volatility” in its share price, and said it knows of no material circumstances or events that would have caused the unusual trading.

The company also noted that underwriters of its IPO can purchase an additional 2.4 million shares at the offering price before August 15, under what’s known as a greenshoe option. Those underwriters include AMTD Global Markets, a subsidiary of AMTD Digital’s parent company, AMTD Idea Group.

AMTD Idea’s own shares more than tripled on Tuesday to $7 apiece, and were up 1.2% in morning trading on Wednesday. AMTD Idea held 88.7% of AMTD Digital’s outstanding shares following the latter’s IPO, according to an SEC filing.

Nathan Anderson, a New York-based activist investor and the founder of Hindenburg Research, said the small number of AMTD Digital shares available for trading, coupled with strong retail interest, has helped fuel the trading frenzy.

“When there’s a very thin number of shares available to trade, the stocks can be particularly volatile,” Mr. Anderson said. “It would be subject to massive upward price movements and potential manipulation.”

"While sure price is stupid, it only traded 339k shares yesterday," Citron Researchtweeted on Wednesday. "[It] has not captured the imagination of retail traders like $GME,” the tweet read, referring to GameStop.