AMTD IDEA (NASDAQ: AMTD) (SGX: HKB) stock will rise 300%. AMTD stock’s three-fold rise is not the result of a return of the meme stock idea that prevailed about a year ago. When something in Hong Kong and finance jumped into the stratosphere. TOP Financial, for example, a thoroughly reputable futures broker, shot into the stratosphere before apparently falling back to something resembling an objective value. Or AMTD Digital was worth more than Goldman Sachs shortly after its IPO: and obvious absurdity. Magic Empire Global was another. Simply the M-markets, caught up in the illusion that the cunning sons of the Orient would conquer the world’s financial space. Or even a bubble, which everyone knew was a bubble, but what fun it was to play, right?
Such fun and games ended, as all such fun and games do. The different stock prices are deflated. Which then poses a problem. Because Nasdaq listings are real things, not just toys, and there are real rules attached to them. One of them is the minimum bid price of $1. You have to keep the share price above this magic number, otherwise the listing will be lost after some time – usually 18 months – and the share will go to the OTC market. This is where AMTD IDEA is currently failing.
AMTD IDEA stock price from Google Finance
Since the very idea of entering the market is to be in the market, something needs to be done. The usual solution is a reverse stock split. Since the AMTD IDEA price is actually an ADS and not the direct stock itself, this results in a change in the ADS or ADR ratio. Instead of one ADR/ADS representing two underlying stocks, there are now 6. The effect is like a one-for-three reverse stock split: “AMTD IDEA Group (NYSE: AMTD; SGX: HKB) (“AMTD IDEA” or The “Company”) today announced that it has changed the ratio of its American Depositary Shares (“ADSs”) to its Class A common shares (the “ADS Ratio Change”), par value $0.0001 per share one (1) ADS representing two (2) shares of Class A common stock to one (1) ADS representing six (6) shares of Class A common stock, effective on or about November 17, 2023, US Eastern Time (the “Effective Date”).”
This does not change the underlying company valuation, only the number of pieces of paper it consists of. Therefore, the value of the pieces of paper changes – by 300% or three times. This does not change the underlying business either. Our strong suspicion – and this is just an opinion – is that the entire structure represents a way to shift control of assets from the mainland to overseas. We could certainly be wrong, but we’re not sure whether AMTD is still really investable for outside shareholders.
Comments are closed.