Since its mid-July initial public offering, AMTD Digital (NYSE:HKD) stock has gone to the moon.
At the time of writing, HKD stock trades at $390. At the company’s IPO on July 15, shares of the financial media company were listed at $7.80.
Thus, the math on this IPO is rather incredible. Those who bought in at the debut price have booked gains of more than 4,500% in just two weeks. That’s right, a 45-bagger in this short amount of time.
In short order, AMTD has become among the most speculative stocks in the market that just seems to keep going higher. Today’s doubling on little news appears to indicate just how bullish investors are on this momentum stock.
Let’s dive into how sustainable this move might be.
Is Now the Time to Buy HKD Stock?
Any stock that moons in such short order should be met with significant scrutiny by investors. Indeed, this stock’s upward trajectory is incredible. And there appears to be a lot to like about the company’s high-margin (and profitable) business model.
However, after this incredible rise, AMTD stock is now trading at an eye-watering multiple of more than 1,500 times trailing earnings. Given where the S&P 500 multiple is (less than 20 times earnings), there’s a clear indication that this stock is severely overvalued, even among the highest-growth stocks in the market.
Momentum is great, and we’re seeing momentum rallies in some of the most speculative assets again today. Investors are bullish. Retail investors more so.
However, this run appears to be unsustainable, on a number of levels. Investors watching AMTD may want to do so from the safety of the sidelines right now. It’s still a bear market (thought it can be easy to forget that). And in bear markets, these sorts of runs can fizzle out sooner than expected.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
