Little-Known Stock’s 32,000% Surge Ends With $175 Billlion Drop

(Bloomberg) — Even after a retail frenzy that saw GameStop Corp. become the hottest stock in the world and a dog-themed joke cryptocurrency gain billions in value, the whirlwind trading in an obscure Hong Kong financial business stands out as spectacular.

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The rapid rise of AMTD Digital Inc. — a barely profitable financial services firm — is a tale that, while reminiscent of last year’s meme-stock frenzy, is even more mysterious. In a move that has puzzled the financial community, the company’s shares skyrocketed in less than three weeks from their $7.80 initial public offering price to an intraday high of $2,555, an eye-popping jump of more than 32,000%.

Perhaps even more perplexing, unlike other publicly traded financial juggernauts that report hundreds of billions of dollars in revenue each year, AMTD’s IPO prospectus lists total sales of just $25 million for the year ended April 2021. Still, that didn’t stop the company’s market value from ballooning to $310 billion at Tuesday’s close, making it larger than industry stalwarts like Goldman Sachs Group Inc. and Bank of America Corp.

“I’m not entirely sure what the business model there is, but that hasn’t mattered to the Reddit crowd who are dipping in like piranhas,” said Max Gokhman, chief investment officer at money manager AlphaTrAI Inc.

Much like the retail-induced mania of early 2021, which catapulted stocks like GameStop and AMC Entertainment Holdings Inc. to baffling highs before they plunged just as quickly, AMTD’s run as a financial giant seems likely to be short-lived. Since hitting a record on Tuesday, ATMD Digital has fallen by 57%, erasing about $175 billion in market value along the way. That’s more than the entire current market capitalization of companies including Morgan Stanley, Intel Corp., and Goldman Sachs.

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Still, it’s hard to pin the stock’s wild moves entirely on the retail crowd. While AMTD Digital appeared high on Fidelity’s list of most actively traded stocks multiple times during the week, it lacks a few key…

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