The market has a relentless fighting back and has shot up 13% since its recent low in Jun. Looks like it will likely take over the 4200 level soon, if not tomorrow. When the market is in such a strong rally, it often leads people to believe that the bear market is done and we are on the way back to the bull market. It is certainly possible but I'm personally not so sure yet. There is still numerous evidence to suggest otherwise, asking for cautions! The story below is one of them.
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A new story is making the GameStop saga of early 2021 look like peanuts...
AMTD Digital (HKD), a previously little-known Hong Kong-based technology company, has become the latest darling of Reddit's WallStreetBets crowd.
The company held its initial public offering ("IPO") in mid-July... and its stock is up roughly 14,000% through today. It was even higher yesterday, up as much as 32,000%, to a total market cap of $400 billion. That's more than Coca-Cola (KO) or Costco Wholesale (COST).
And you don't have to be a financial expert to recognize that AMTD Digital is a worse business than Coke or Costco.
AMTD Digital – which markets itself as "Asia's one-stop comprehensive digital solutions platform" – has only $25 million in annual revenue and 51 employees. Just two years ago, it was accused of fraud by one of China's largest private-equity firms.
There's no reason for its shares going from a $7.80 IPO price to north of $2,000 yesterday – other than people rallying online to push the price higher.
Bubble stocks like HKD is exactly why this bear market is not done yet. Investors are still chasing that quick buck despite the obvious risks. They are also quick to call the bottom on any rebound.
If anything, as Brian suggests, take this meme-stock revival as an indicator that the stock market still has some bubble behavior left in it. And that means potentially more downside ahead as it pops.
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