The lock-up expiration adds to buying pressure we previously reported, based on rumors of a short squeeze and China ending its strict Covid-19 lockdowns.
AMTD was one of 2022's great speculations, the stock rising to $485 after its July initial public offering (IPO), then falling below $10. The stock was due to open on Jan. 6 at over $35/share.
What's Going On?
HKD lists 185 million shares outstanding but only 21 million in its "float," available to trade. This makes it easy to manipulate.
Nathan Michaud of InvestorsLive tweeted his suspicion that's just what is happening. The company will release 16 million new shares next week at $7.80. "It’s an inside job to create liquidity before the 11th," he wrote. "They had a plan all along. Run it up while float is thin create a market and they can hedge." In other words, pump it with orders, short it, sell the new shares, and profit.
Marketbeat has called the rally dangerous for both bulls and bears. One reason might be that traders at Stocktwits were confusing the brokerage with HKD.com, a cryptocurrency trading firm. Others were simply more bullish.
What they're buying, however, is open to question. Fellow InvestorPlace contributor David Moadel explained this in August and nothing much has changed. AMTD claims it has a "metaverse" called SpiderNet, and the parent company owns a French fashion magazine, L'Officiel, but HKD itself listed just $25 million in revenue for 2022. The latest push sent the market capitalization to over $5.6 billion.
HKD Stock: What Happens Next?
At some point, the balloon pops.
Those who see it coming will get out with profits. Everyone else will be left holding the bag. For small investors, without sophisticated trading software, this isn't going to end well.
On the date of publication, Dana Blankenhorn held no positions in stocks listed in this story. 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 firstname.lastname@example.org, tweet him at @danablankenhorn, or subscribe to his Substack.