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Why Is AMTD Idea (AMTD) Stock Up 30% Today?

  • AMTD Idea (AMTD) is capitalizing its AMTD Digital (HKD) unit with proceeds from real estate sales.
  • The deal will maintain control for chairman Calvin Choi and give the company real assets.
  • Billionaire Li Ka-shing, whose credibility helped AMTD stock get started, has disavowed the company.
AMTD stock - Why Is AMTD Idea (AMTD) Stock Up 30% Today?

Source: Michael Vi / Shutterstock.com

AMTD Idea (NYSE:AMTD), the company behind last month’s AMTD Digital (NYSE:HDK) stock explosion, saw its stock briefly jump 27% overnight after it announced it will move cash from some of its real estate assets into the spinoff.

The company said net proceeds of $268 million from a $500 million real estate sale will first be turned into AMTD Idea stock at $8.68 per share. Then, it will go into AMTD Digital at the equivalent of $208 per American depositary share. Before the announcement, AMTD stock was selling at $2.26 per share and HKD stock at $192.

What’s Going on With AMTD Stock?

The move may be less bullish than it seems. Li Ka-shing, whose CK Hutchison (OTCMKTS:CKHUY) conglomerate originally backed AMTD Digital, distanced himself from the company after its historic run-up. CK Hutchison said it has “no business dealings” with AMTD Digital, adding it planned to sell the 4% of parent AMTD Group it did own.

The bull run briefly made AMTD Digital chairman Calvin Choi worth more than Li himself.

AMTD Digital had soared from $7.80 per share at its debut, where it raised about $125 million to a peak of $1,679 per share. The fall that followed erased more value than Goldman Sach’s (NYSE:GS) market capitalization. Choi is currently being investigated by local stock exchanges over his past business dealings.

What Happens Next?

InvestorPlace contributor David Moadel recently warned AMTD’s run may have been just a short squeeze. When I looked at HKD, I could find nothing in it but internet buzzwords, like the metaverse.

The movement of assets will give AMTD Idea an 87% interest in AMTD Digital when it’s complete in September. It seems to be a move by Choi to capitalize the company with real assets while maintaining control over it. If you have ever lost a game of Three-card Monte, keep a close hand on your wallet and just be entertained by whatever happens next.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-is-amtd-idea-amtd-stock-up-30-today/.

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