Reddit Investors Baffled After Tech Company’s Stock Explodes 32,000% for No Reason

On Tuesday, a Hong Kong-based tech company's stock price skyrocketed by more than 32,000 percent after it went public in mid-July, from $7.80 to a high of $2,555 per share. Nobody, not even the company itself, knows why. The company has had no important announcements, and its description of what it does is a jumble of buzzwords.

AMTD Digital’s website bills the company as the "fusion reactor at the core of the AMTD SpiderNet ecosystem,” with a press release announcing that AMTD SpiderNet was going to be part of a metaverse project to host fintech startups. Beyond that, the company's website lists "digital financial services, digital media, content & marketing, SpiderNet ecosystem solutions, and digital investments" as some of the offerings of AMTD Digital.

Still, none of this has stopped the members of Reddit’s WallStreetBets subreddit from jumping on the latest meme stock, or at least trying to figure out what’s happening so they can get in on it. 

In one thread asking "why isn't anyone talking about this" a user shares a photo of the stock rising 5,607.69 percent over the past month. "Because this is a pump and dump obviously.... nothing organically raises 5000%" says a user named The_BitCon, before someone replies "You say that like this sub wasn't built on pump and dumps..."

Part of the reason for all the attention—and the skepticism—centers on the relatively low volume that's behind this large price surge. The IPO was priced at $7.80 a share and raised $125 million, but on Tuesday hit a high of $2521.72 with just 250,000 shares being traded. For a short while, the company had a market cap just shy of $400 billion. The company has about 185 million shares outstanding, but only 19 million shares float (can be bought and sold by the public). In other words, it's relatively easy for a relatively small number of buys to move share significantly—which has been the case for the past few weeks. 

In a statement issued on Monday, AMTD acknowledged there was nothing material behind the huge price action of its stock. 

"To our knowledge, there are no material circumstances, events nor other matters relating to our company's business and operating activities since the IPO date," AMTD said. It also added that it was "still undergoing our initial stabilization whereby the underwriters have been granted a green-shoe option." 

A green-shoe option is offered to underwriters of an IPO—typically investment banks—that let them exercise an option to buy millions of shares at the IPO price, then sell those shares for an immediate profit. In this case, that means 2.4 million shares for $7.80 for a grand total of $18.72 million. At market close, AMTD Digital's stock was $1,899 meaning that if the green-shoe option were fully executed and there were enough buyers, it could bring in $4 billion.