- AMTD Digital’s shares are up as much as 32,229% since its July IPO, and one has no idea why.
- AMTD Digital is a Chinese technology company with a market valuation of more than $385 billion.
- Its parent company, AMTD Idea Group, rose more than 500% in trading on Tuesday.
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AMTD Digital’s stock has soared as much as 32,229% since its IPO in mid-July with no discernible news, suggesting the rally is being driven by low dispersion in outstanding shares and overwhelming demand for the stock.
The Hong Kong tech company is traded on the New York Stock Exchange and priced its IPO at $7.80 per share, which helped it raise $125 million in proceeds. On Tuesday, the stock hit a high of $2,521.72 on volume of just over 250,000 shares, briefly valuing the company at more than $385 billion.
In a statement Monday, AMTD Digital thanked its investors for the successful completion of its IPO, which closed more than two weeks ago. The company added that trading in its American Depositary Shares “is still going through our initial stabilization with a greenshoe option granted to the underwriters.”
That means the underwriters of AMTD Digital’s IPO will have an option to purchase 2.4 million shares at $7.80 per share, or approximately $18.7 million. The underwriters can then book an immediate profit by selling the shares on the open market, provided the share price doesn’t fall 99% from current levels by Aug. 15. At Tuesday’s high, this greenshoe option was worth more than $6 billion.
The underwriters who will benefit from AMTD Digital’s post-IPO wild surge are AMTD Global Markets Limited, Livermore Holdings Limited, Eddid Securities and Futures Ltd. and Eddid Securities USA Inc., according to a July statement from the company.
Curiously, AMTD Global Markets Limited is a subsidiary of AMTD Digital’s parent company, AMTD Idea Group. Shares in AMTD Idea Group, a Chinese financial company, rose more than 500% in trading on Tuesday. According to a filing with the Securities and Exchange Commission, as of July 15, AMTD Idea Group owned 97.1% of AMTD Digital’s outstanding shares.
“To our knowledge, there have been no material circumstances, events or other matters related to our company’s business and operations since the IPO date,” AMTD Digital said in its statement Monday.
AMTD Digital has a small inventory of just 19 million shares. That is, when there is overwhelming demand for the stock and few sellers, the stock price goes vertical. Some of these purchases appear to be driven by retailers. According to data from Fidelity, the most traded stock among its client base on Tuesday was AMTD Idea Group.
Markets Insider
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