What is AMTD Digital (NYSE:HKD)? That question has been on many investors’ minds recently. The company describes itself as “Asia’s One-Stop Comprehensive Digital Solutions Platform.” Since the little-known Chinese stock shot to truly unexpected heights this week, the financial world has been marveling. After making its trading debut on July 15, HKD stock didn’t turn many heads. But later in the month, it started surging and didn’t slow down until today.
Shares are falling now, but it has still skyrocketed by more than 200% over the past five days. Its gains for the month are at an astounding 3,200%. When a previously unknown company sees gains of that magnitude, one question immediately comes to mind: is this the next meme stock?
HKD Stock: The Next Meme Sensation?
Ever since stocks such as Gamestop (NYSE:GME) rose to overnight success on social media speculation in early 2021, investors have been on the hunt for the next meme stock. Reddit’s r/WallStreetBets crowd has a proven track record of temporarily pushing up the stocks that Wall Street has written off, only to have them fall just as quickly.
A recent example is the squeeze spike from Revlon (NYSE:REV) after the cosmetics retailer announced bankruptcy. Now, some experts have already flagged HKD as the next meme stock that investors should be watching.
CNBC has introduced HKD stock as “The $300 billion meme stock that makes GameStop look like child’s play.” Although its significant surge earlier this week did push the company to a market cap of more than $300 billion, it has since fallen back to less than $170 billion. But as the outlet also acknowledges, there are certainly parallels that can be drawn between HKD’s recent surge and the Gamestop moonshot that started the meme stock trend.
“The wild trading is reminiscent of the Gamestop mania of 2021 where a band of Reddit-obsessed retail investors managed to push up shares of the video game retailer and squeeze out short selling hedge funds. Indeed, the ticker HKD became the most popular mention on Reddit’s WallStreetBets chat room Tuesday, according to alternative data provider Quiver Quantitative.”
While HKD stock may be receiving considerable traction on Reddit, many r/WallStreetBets users aren’t claiming credit for the stock’s rise. “I feel like all of us knew about this stock only when it was too late,” speculates one user. Another posted a chart of the stock, describing it as “proof WSB did not have anything to do with HKD.”
A Twitter (NYSE:TWTR) account linked to the forum tweeted the following, referencing an article published by USA Today:
— /r/wallstreetbets (@Official_WSB) August 4, 2022
The Bottom Line
That said, speculation regarding both HKD stock and its parent company, AMTD Idea (NYSE:AMTD), remains high on both Reddit and Twitter. While r/WallStreetBets might not have intended to turn HKD into a meme stock, it may have inadvertently done exactly that.
The current sentiment among digital contrarian investors, though, is that both stocks’ rises are part of larger pump and dump plays. The fact that HKD is down more than 40% as of this writing and AMTD is down 35% definitely supports that argument.
HKD has all the markings of a meme stock, but not one that has any staying power. Like many others that came before, it is already on its way down.
On the date of publication, Samuel O’Brient 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.