Why Is Magic Empire Global (MEGL) Stock Up 2,000% Today?

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  • Magic Empire Global (MEGL) stock is surging more than 2,000% on its debut today.
  • The company announced the pricing of its initial public offering (IPO) yesterday at $4 and has since surged to the $90 level.
  • Speculative buying appears to be at play alongside another Hong Kong-based company, AMTD Digital (HKD).
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On an otherwise down day in the market, some stocks are seeing incredible interest. Magic Empire Global (NASDAQ:MEGL) is one of these names; MEGL stock made its debut today to the cheer of investors. As of this writing, shares are increasing more than 2,000% on its first day of trading.

Magic Empire Global announced the pricing of its initial public offering (IPO) yesterday, pricing 5 million shares at $4 per share. This capital raise of $20 million — for a company with revenues of less than $17 million — is significant. However, the incredible surge in shares to the $90 level has raised questions as to whether the IPO was misplaced.

In general, while IPOs tend to be priced attractively to ensure some capital appreciation for early investors, that doesn’t seem to be the case with MEGL stock. So, let’s dive into the potential drivers of this high-flying stock.

Why Is MEGL Stock Soaring Today?

Hong Kong-based Magic Empire Global is a rather interesting company to assess. The financial services company focuses on underwriting and corporate financial advisory services. Accordingly, many investors may draw parallels between Magic Empire and AMTD Digital (NYSE:HKD), which also recently skyrocketed following its IPO.

Like Magic Empire, AMTD is a financial services company focused on digital banking technology as well as other financial-related services. Both companies have similarly small revenues yet have moved upward in very short order.

Speculators looking for potential outsized gains appear to be targeting foreign stocks with low floats and relatively low price-per-share metrics. Both MEGL stock and AMTD provide similar fundamentals and a look into how meme traders are assessing markets right now.

Whether this run can continue for much longer remains to be seen. While AMTD stock is now valued at more than $100 billion — a valuation that makes no sense — it’s possible Magic Empire could follow suit, leading to more speculative momentum buying in the near term.

That said, both companies represent extreme levels of risk. Accordingly, I’m of the view that these stocks are untouchable right now, except for those looking to take a conservative medium-term short position.

On the date of publication, Chris MacDonald did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-is-magic-empire-global-megl-stock-up-2000-today/.

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