AMTD Digital Market Cap Rises From $1 Billion to $400 Billion: What Is It and Who’s Behind It?

AMTD Digital Inc. What is the world and who is behind it?

That’s the question many investors are asking themselves after an unnamed Hong Kong company attempted to join the ranks of global mega-maps worth around half a trillion dollars on Tuesday.

It started when US Depository Shares (ADS) with the ticker symbol HKD opened, rallied 25% from the previous close as soon as trading commenced before continuing to hit a high of the day at 2,555 dollars.

At its peak, it more than tripled in value and reached a market capitalization of over $450 billion, more than Facebook parent company Meta or Chinese online retail giant Alibaba.

And it did so with a daily volume of just 350,500 shares, according to data from Yahoo! Financethe lowest level since ADS started trading and well below the 1.2 million traded on average.

Even if it has now dropped by a quarter in value on Wednesday, it is still worth about $240 billion, making it more valuable. Toyota, Nike, McDonald’s or Walt Disney.

Needless to say, this is an impressive performance for a company that sold 16 million shares at $7.80 per share in mid-July, with a market capitalization of around $1 billion.

What’s behind the increase?

There doesn’t seem to be any justification for that kind of market cap.

Its total income-generating assets on its balance sheet barely broke the $400 million mark in March according to SEC filingsa celebrity in the world of high-end finance. Luck tried to contact the company but emails and calls were not immediately answered.

Look at it website reveals little about its business model. Its brief one-minute company presentation video markets the company as a “single digital solutions platform in Asia and a fusion reactor for entrepreneurs and the best ideas of the time.” digital age” using a Star Wars-like aesthetic.

A closer look at its prospectus filed with the SEC reveals what that means.

AMTD Digital is essentially selling a kind of club membership to a “Spider Web Ecosystem Solution”, which claims to benefit by connecting businesses together. This figure includes the majority of US$25 million in annual revenue generated during the financial year ending April 2021.

It is unusual that pre-tax profits for the past three years have consistently been above the leading edge thanks to the accounting profit at fair value for the company’s economic interests in companies such as Appier, DayDayCook WeDoctor and five companies. Asian financial company.

The company’s parent company is AMTD Group, a Hong Kong conglomerate that lists investment banking, hospitality, premium education, media and entertainment as its core competencies. It also has another subsidiary, AMTD IDEA, which is also listed on the New York Stock Exchange, although it is only worth $14 billion.

‘Significant volatility’

Why AMTD Digital is listed exactly in the US is unclear, as it immediately warned investors in its stock sale prospectus that it could eventually be forced to delist under the regulations. SEC rules.

That’s because the red tape put out by Beijing is currently preventing its Chinese auditors from being examined by the US Public Company Accounting Oversight Board established under the Sarbanes-Oxley Act.

This is a constant source of frustration for investors in many Chinese stocks. If the US and China fail to reach an agreement, about 261 Chinese companies listed in the US with a combined market value of $1.3 trillion will face delisting.

Chairman and CEO of parent AMTD Group, Calvin Choistepped down as chief executive officer at UBS to take over.

Capitalist History and Differences as a Young Global Leader with the World Economic Forum Doesn’t Stop Him praise the power of the communist party of mainland Chinaor celebrate the “glory and dream of the great Rebirth of the Chinese nation” a century after its founding.

Despite boasting an executive vice president with a track record of dealing with corruption and connections to Carrie Lam – Beijing’s former governor in Hong Kong – Choi himself, however, did not. is said to be being targeted for a two-year industry ban by the city’s securities regulator after investor China Minsheng Investment Group accused Choi of misconduct.

“Some projects [undertaken with funds from CMIG] really made money, but he didn’t bring us any profit,” said a senior executive at the company. tell China Caixin back in october 2020. “Some have lost money, but we don’t know if he actually invested or misappropriated the money.”

Unusual earthquakes

In the world of fundamental analysis, where companies are valued based on their future cash flows, AMTD Digital’s incredible market capitalization is an unusual seismic in the financial system that according to Statistics should only appear once every hundred years.

Even AMTD Digital doesn’t seem to understand why it’s so valuable. Use one thank you note given its newly minted shareholders an opportunity, it also claimed that it was also hampered by the performance of its shares.

“In the time since our initial public offering, the Company has seen significant volatility in our ADS price and also observed some very active trading volumes.” it’s written on Tuesday. “To the best of our knowledge, there have been no other significant circumstances, events or matters relating to the business and operations of our Company since the date of the IPO.”

With such a jump, it’s no surprise that fixed people emerge from their slumber. Noted short sellers Jim Chanos asked if “we’re all going to ignore the 400 billion inventory memes in the room” while Hindenburg Research’s Nate Anderson called its controlling owner AMTD Group “slim “.

Coincidentally, Securities and Exchange Commission Chairman Gary Gensler hailed the 20th anniversary of the Sarbanes-Oxley Act aimed at restoring confidence in U.S. capital markets after accounting fraud scandals that sent investors Investments in Enron and Worldcom are highly appreciated.

The race causes painful memories of Robinhood’s fateful decision to eliminate the possibility retail investors place buy orders on the GameStop retail chainwas seen as a decision to protect a handful of deep-water hedge funds on meme stocks.

“So why is the HKD buy button not removed?? Because retail is not behind it? “Answer one Twitter users for Gensler on Tuesday. “The stock market scam is real. You’re useless.”

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