Hong Kong-based financial services startup AMTD Digital is up over 3,000% in the past week, and was up over 100% yesterday. Why?
The stock is being discussed on Reddit forum WallStreetBets (Warning: Strong language). The stock is up over 20,000% since its IPO on July 15. It listed at under USD 10 per share and is currently trading at USD 1,679.
AMTD Digital is a part of Hong Kong-based investment bank AMTD Idea Group (AMTD) which is currently trading at around USD 7 per share.
The company issued a statement on Tuesday, saying it, “…expressed its appreciation of support from the investor community for the successful completion of its initial public offering (”IPO”) of 16,000,000 American depositary shares (“ADSs”) at a price of US$7.80 per ADS. During the period since our initial public offering, the Company noted significant volatility in our ADS price and, also observed some very active trading volume. To our knowledge, there are no material circumstances, events nor other matters relating to our Company’s business and operating activities since the IPO date.”
What Is a Meme Stock?
A meme stock is a pure child of the 2020s. There’s no clear definition. It isn’t a value stock or a growth stock. It just… is.
Jokes apart, meme stocks are stocks that see dramatic price increases, mostly fueled by people on social media (primarily Reddit, Twitter and TikTok). These stocks rarely have company fundamentals that back the rise in price and are often highly volatile. So why do people buy them?
FOMO is one of the main drivers of investor buying. The term stands for the “fear of missing out,” coined by Patrick J. McGinnis in 2004 and used largely by the highly connected millennials and Generation Z.
“This ‘fear’ is spurred on by the fact that many of us are inundated with updates about our social circle’s activities, to the point that some individuals feel like they are ‘missing’ out if they are not actively participating in conversations or activities around them,” explains Ian Tam, Morningstar Canada’s director of investment research. “The term is generally regarded with a negative connotation, sometimes contributing to a person’s indecisiveness or overcommitting to obligations.”