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

What is AMTD Digital in the world and who is behind it?

That’s the question many investors are asking themselves when an unidentified company based out of Hong Kong managed to join the ranks of global megacaps of nearly half a trillion dollars on Tuesday.

It began when American Depository Shares (ADS) with the ticker code HKD gapped open, vaulting 25% over the previous closing price, before heading to an intraday high of $2,555 just before trading began.

At its peak it more than tripled in value and reached a market cap of over $450 billion, which is . was more than Facebook Parent Meta or Chinese online retailing giant Alibaba.

And it did so on a daily volume of only 350,500 shares, which is . is according to the data of Yahoo Finance, its lowest since ADS began trading and well below the 1.2 million traded average.

Even though it dropped a quarter of its value on Wednesday, it’s still worth about $240 billion, which makes it worth more than that. Toyota, nikeMcDonald’s or Walt’s Disney,

Needless to say, it was an impressive performance for a company that sold 16 million shares at $7.80 each in mid-July, giving it a market cap of nearly $1 billion.

What’s behind the boom?

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

Total income-generating assets on its balance sheet barely break the $400 million mark as of March According to SEC filingsA little bit in the world of high finance. Good luck Tried to contact the company, but emails and calls were not immediately answered.

have a look at this Website Discloses very little of its business model. Its brief one-minute-long corporate presentation video gives a distinctive take on the firm as “a one-stop digital solutions platform in Asia and a fusion reactor for the best entrepreneurs and ideas in the digital age”. star wars– Like beauty.

An in-depth look at its prospectus filed with the SEC reveals what that means.

AMTD Digital basically sells its “Spidernet Ecosystem Solutions” as a kind of club membership, which claims to bring profit by connecting businesses to each other. It makes up the bulk of its $25 million in annual revenue generated in the fiscal year ended April 2021.

Rather unusually, its pretax profits have consistently exceeded its top line for the past three years, thanks to fair value accounting advantages over its economic interests in companies such as Appear, DedeCook, WeDoctor and five Asian fintechs.

The parent of the company is AMTD Group, a Hong Kong conglomerate that lists investment banking, hotel services, premium education and 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 its value is only $14 billion.

“significant instability”

Why US-listed AMTD Digital is unclear, as it immediately warned investors in its share sale prospectus that it could eventually be forced to liquidate under SEC rules.

That’s because red tape imposed by Beijing is currently preventing its Chinese auditor from being overseen by the US Public Company Accounting Oversight Board, established under the Sarbanes-Oxley Act.

It’s been a constant source of frustration Investors in many Chinese stocks, Should the US and China fail to reach a deal, about 261 US-listed Chinese companies, with a combined market value of $1.3 trillion, face a tough time.

Chairman and CEO of parent AMTD Group, calvin choiquit his job as Managing Director at UBS to take over.

His capitalist history and pride as a young global leader with the World Economic Forum does not deter him from doing so. Praising the Strength of the Communist Party of Mainland ChinaOr celebrating the “glory and dream of the great rejuvenation of the Chinese nation” a century after its founding.

Despite claiming to be an executive vice president with a record of combating corruption and Carrie Lam—Beijing’s previous governor in Hong Kong—Choi himself, however, Reportedly being targeted for a two-year industry ban by the city’s securities regulator after investor China Minsheng Investment Group accused Choi of wrongdoing.

“Some Projects” [undertaken with funds from CMIG] Actually made money, but he didn’t give us profits,” said a senior executive of the company said of china Caixin back in october 2020, “Some did suffer losses, but we don’t know whether they actually invested the money or invested it the wrong way.”

a seismic anomaly

In the world of fundamental analysis, where companies are valued based on their future cash flows, AMTD Digital’s mind-boggling financial system has a seismic anomaly that, statistically speaking, should only occur once every hundred years.

Even AMTD Digital is at a loss as to why it is so valuable now. using a Thank you letter As an opportunity to his newly created shareholders, he claimed that he too was amazed by the performance of his stock.

“During the period following our initial public offering, the Company saw significant volatility in our ADS price and also saw some very active trading volume,” it wrote on Tuesday. “To the best of our knowledge, there have been no material circumstances, incidents or other matters relating to the business and operating activities of our Company since the date of the IPO.”

With that kind of leap, it’s no surprise that PermaBear jumped out of its slumber. Noted short-seller Jim Chanos asked if “we’re all going to ignore the 400 billion mem stock in the room” while Hindenburg Research’s Nate Anderson called its controlling owner AMTD Group “sketchy”.

Coincidentally it came on the same day that Securities and Exchange Commission Chairman Gary Gensler celebrated the 20-year anniversary of the Sarbanes-Oxley Act to restore confidence in US capital markets after the accounting fraud scandals that plagued investors at Enron and WorldCom. appreciated.

The run-up triggered painful memories of the fatal decision to remove Robinhood’s ability Retail Investor Retail chain GameStop . will place a purchase order onThe decision to protect a handful of hedge funds was seen as deep underwater on the meme stock.

“So why was the buy button for HKD not removed?? Because retail was not behind it?” answered one Twitter Users for Gensler on Tuesday. “Fraudulent stock market for real. You suck.”

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