A small Hong Kong company, AMTD Digital, has seen its share price rise 21,000% in a matter of weeks, with its success characterised as part of the meme stock phenomenon.

AMTD Digital, a subsidiary of the AMTD IDEA Group, is a provider of digital solutions for financial services clients. It also offers its own metaverse, AMTD SpiderNet, which is mainly used by fintechs. Last year, it brought in $25 million in revenue.

The company made its debut on the New York Stock Exchange last month with shares priced at $7.80. Its shares grew steadily in value over the next few weeks – $20 on the 21st, $43 on the 25th, $180 on the 28th. But after that saw an explosion of growth, peaking on the 2nd of August at $1,679.

The bulk of the rise in its value was in from its Class B shares, which are not traded publicly. This gave the company a peak valuation of $300 billion, bigger than Disney or Coca Cola.

Its parent company, AMTD Idea Group, also rose around 520%. The share price has since dipped down to $1,100 – a still considerable increase from where it started.

The sudden, massive, and unpredicted rise in the value of AMTD has led to it being deemed the latest meme stock.

What is a Meme Stock?

A meme stock is a stock that large groups of people buy for purposes, often frivolous, other than financial gain, such as for comedic reasons, or to cause problems for other investors.

The buyers are often young or inexperienced and utilise mass-market commission-free trading apps. Social media helps drive the stock’s popularity.

Perhaps the first, and one of the most prominent examples of this, was the sudden popularity of stock in GameStop, a struggling US video game retailer. In a matter of a month in early 2021, the company’s share price had gone from around $17.25 to over $500.

While there were multiple causes for a large group of investors latching on to GameStop’s stock, one commonly cited was the fact that some hedge funds had shorted GameStop’s stock, i.e., were betting that the price would go down.

Riding a wave of hostility towards Wall Street, the meme investors bought shares to drive on the price, largely to sour the hedge fund’s position. One group lost around 30% of its value during the same timeframe as the GameStop meme stock.

What Made AMTD Rise?

Even AMTD is baffled by the sudden increase in its stock value.

“During the period since our initial public offering, the company noted significant volatility in our ADS price and also observed some very active trading volume. 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,” a statement from the company read.

One of the biggest drivers of meme stocks is the Reddit forum r/wallstreetbets. It was the biggest driving force behind the rise of GameStop shares. But of all the stocks of all the companies for it to latch on to, an obscure Hong Kong digital services company is a strange choice.

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So what does r/wallstreetbets have to say about AMTD and whether it is a meme stock?

Well, for the most part, there was very little chatter on the forum about AMTD before its sudden rise became public. Posters have noted that they were behind on the stock, only becoming aware of it when it was past its peak.

As such, it is still uncertain what drove AMTD’s massive increase in share price.

At this point, certain stocks become a self-fulfilling prophecy – as it gains in value, more and more people pile on, hoping to make a profit further up the line. This in turn drives the price up, creating more momentum and more publicity.

However, with the stock already on the downturn, it likely to have hit its peak.

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