The party ends as AMTD Digital (HKD) stock drops below $900

The sheen may finally have fallen off for AMTD Digital (HKD), the Hong Kong investment company that was worth more than Walmart (WMT) just two days ago. Shares are currently down 25% at $825 in the first half hour on Thursday. This comes a day after HKD stock sold off 34.5% to end the day at $1,100 on Wednesday. This puts HKD stock 68% off its all-time high of $2,589 on August 2.

Also read: AMTD Digital (HKD) advances to $2,000 in seventh consecutive gaining session

AMTD Digital news

Billionaire Li Ka-shing’s CK Group has formally and publicly divested all his stake in AMTD Group, the grandparent, as it were, of AMTD Digital. The company has raised eyebrows on Wall Street and possibly in government since shares of AMTD Digital vaulted over 33,000% since its July 15 IPO at $7.80. 

AMTD Digital is a subsidiary of Hong Kong-based AMTD IDEA Group, and the latter owns about 89% of the former. AMTD Group owns a little over half of AMTD IDEA Group. It is similar sounding AMTDs all the way down.

Ka-shing's CK Group only held about 4% of AMTD Group and did not own any shares directly in AMTD Digital. Much of the scrutiny regards AMTD Group's chairman, Calvin Choi. The Hong Kong native is a Canadian citizen who is a former UBS banker. Choi was already facing an industry ban in Hong Kong for earlier failure to disclose conflicts of interest, according to an article in The Wall Street Journal.

The subsidiary AMTD Digital was worth more than $400 billion briefly on Tuesday despite only having fiscal year revenue in the range of $25 million. The company runs an investment banking platform, mostly for startups it appears, called SpiderNet.

AMTD Digital (HKD) went public on July 15 by selling 16 million American depositary shares for $7.80 each, though the stock immediately opened at $13. The IPO gave AMTD Digital a valuation between $1 and $2 billion. While the stock has 185 million total shares, only about 19 million are available to trade. This makes for a minuscule float that allowed decent demand to quickly overwhelm supply.

AMTD Digital stock forecast

No, this is not the newest crypto scam. This HKD stock one-hour chart is from a real stock that trades on the New York Stock Exchange. HKD share price steadily broke through both the 21-hour and 9-hour moving averages on Wednesday, and it would seem this high flyer is doomed to trend much lower. 

How low? It is very hard to say, but the original underwriters did give AMTD Digital stock a price tag of $1.4 billion before the IPO. That would of course make this a 99% drop if it came to that. It is strange to talk about support with this price action, but if there is any it should be around $800, where a ledge formed on August 1 and 2. Interestingly enough, the Accumulation/Distribution line has been flat at around 65,000 since Tuesday. With the price coming down so swiftly, one would think the line would fall. 

HKD 1-hour chart