Shares of AMTD Digital (NYSE:HKD) stock are in full focus, as the lockup expiration date of Jan. 11 for 16 million shares is quickly approaching, according to Nasdaq. Nasdaq notes that the offer amount is $124.8 million with a price of $7.80 per share.
AMTD Digital stock gained widespread attention following its initial public offering (IPO) in July of 2021. The company sold 16 million American Depository Receipts (ADRs), raising $124.8 million of capital. In the two weeks after the IPO, HKD stock surged by 21,000% to a market capitalization of $310 billion, making it one of the most valuable companies in the world on paper.
Today, HKD trades in the mid-$10 range with a market capitalization of about $2.6 billion. Shares of the company are up by about 50% during the past five trading days. Meanwhile, the lockup expiration is generating controversy on social media. Let’s get into the details.
16 Million Shares of HKD Stock to Hit the Market on Jan. 11
Nathan Michaud, the founder of Investors Live, argues that insiders may be taking advantage of the lockup expiration:
For those wondering why $HKD is up
It's an inside job to create liquidity before the 11th.
On Jan 11th 16m shares at $7.80 become available.
They had a plan all along.
Run it up while float is thin create a market and they can hedge.https://t.co/LutJqR1u8U
— Nathan Michaud (@InvestorsLive) January 5, 2023
It’s absolutely true that the float of HKD is extremely low. Yahoo Finance reports that the public float is just 23.35 million shares, making HKD susceptible to volatile price fluctuations. At the same time, AMTD Digital’s parent company, AMTD Group (NYSE:AMTD), has a very controversial chairman: Calvin Choi. Last year, it was disclosed that the Securities and Futures Commission (SFC) ordered a two-year securities industry ban against Choi during his tenure at UBS (NYSE:UBS) as a banker in 2014 and 2015. The ban involved a conflict of interest while Choi was acting as a financial advisor to shareholders of AMTD Group.
In 2016, Choi became Chairman of AMTD Group. In 2020, shareholders of the company accused him of financial fraud through the misappropriation of funds. Choi denied the accusations. Other insiders of shareholders of AMTD have accused him of taking profits for himself.
Michaud isn’t exactly a knight in shining armor either. He was named in a Securities and Exchange Commission (SEC) civil suit in 2009 involving a fraudulent pump-and-dump scheme. Michaud eventually settled with the agency and agreed to pay about $94,000 without admitting or denying the allegations.
For now, it remains unknown what will happen on Jan. 11. However, rest assured, savvy investors will take it upon themselves to uncover any controversial happenings.
On the date of publication, Eddie Pan 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.
