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Sunday, June 4, 2023

AMT Digital (HKD) Stock: Trade or Stay Away

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Joshua Rodriguez
Joshua Rodriguezhttps://cnafinance.com
Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at [email protected].

AMT Digital Inc – ADR (NYSE: HKD) has been on a wild ride since its IPO in July of 2021, when it launched its IPO, raising $124.8 million in the process. Although the company only generated $25 million in revenue before the launch of its IPO, within two weeks of trading, the stock skyrocketed to a market cap that put it firmly on the list of the top 30 most valuable companies around the globe. 

The wild ride hasn’t slowed yet. In fact, in the four trading days this year, the stock has traded in the range between $9.84 and $29.95 per share. If that’s not a wide gap, I don’t know what is. 

With all the movement in HKD stock, many are considering diving in. Before we get too deep into the article here, I want to let you know that if you’re looking for a buy-and-hold opportunity, this isn’t it. On the other hand, if you’re interested in trading some serious volatility, HKD may be just the stock for you. 

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What Is AMT Digital?

AMT Digital is most widely talked about as an Asian digital investment bank. However, that’s just one of the four legs of the business. These four legs include:

  • Digital Investments: This is the core of the opportunity everyone seems to be talking about. The company is making large investments in digital companies across Asia. 
  • Digital Financial Services: AMT Digital plans on building an intelligent, cross-market, digital financial services platform licensed to provide digital financial services in Asia. This is important as there are few licensed financial services in Asia. 
  • Digital Media, Content, and  Marketing: AMT Digital also has a department of the business that’s centered around digital media. They plan to build a comprehensive content library while producing revenue from digital marketing services. 
  • SpiderNet Ecosystem: The SpiderNet Ecosystem is designed to serve as a connectivity service between Asia-based businesses and entrepreneurs. The goal is for this ecosystem to spur innovation across Asia. 

Is HKD Stock a Good Investment?

Any time there’s significant hype around a stock that causes extreme upward movement, like what we’ve seen from HKD, beginners start to ask whether or not the stock is a good investment. Although HKD stock may be a strong one to trade, it’s not a good target as an investment. 

As mentioned above, the company only generated about $25 million in revenue before its IPO. Today, just a few short months later, it’s trading with a market cap of around $4.3 billion. That alone tells you that the stock is highly overvalued. 

Moreover, extreme volatility is dangerous for investors, but that’s exactly what we’ve seen from HKD stock. The stock has traded between $9.84 and $721.23 since the launch of its IPO, making it one of the most volatile plays on the market today. 

Is a Short Squeeze Coming?

Trading and investing are two completely different concepts. While high levels of volatility are concerning for investors, they’re exactly what traders are looking for – and HKD stock is far from short on volatility. 

As such, this may be a very strong trade to consider. However, now may be the time to take a bearish stance on the stock. All over social media, traders are talking about a short squeeze on the horizon, but that’s highly unlikely. 

For a short squeeze to happen, there has to be a large number of shares sold short. The idea is that as the price of the stock heads up, short sellers must cover their positions by purchasing shares. This pushes buying volume up, causing significant upward movement. 

However, in order for a short squeeze to happen, there has to be a large short interest on the stock. That’s not the case here. At the moment, only about 1% of HKD shares are sold short – meaning there’s no chance of a short squeeze. 

So, Why Is There So Much Movement in Hkd Stock?

This is the million-dollar question, and nobody seems to have the answer. Even AMT Digital doesn’t know what’s going on according to statements made by the company’s management. Here’s what we know:

  • Meme Stock: Some traders have suggested that the movement is the result of meme stock activity. However, for there to be a meme stock, people need to talk about it on social media often. That doesn’t seem to be happening here. 
  • Short Squeeze: Some have suggested that the significant movement is the result of a short squeeze, but that doesn’t seem to be the case either. There’s simply not enough short interest on the stock for a short squeeze to take place. 
  • Volume: Regardless of this not being a meme stock or a short squeeze, volume is crazy. Friday’s volume alone was over 21 million shares. 

The bottom line is simple. Nobody seems to know why HKD stock is on such a wild ride, but traders are loving every minute of it.

Should You Trade HKD Stock?

This is the million-dollar question. First and foremost, if you’re a long-term investor or a novice trader, this isn’t the stock for you. AMT Digital is riddled with risk and there’s no telling which direction the stock is headed next. 

On the other hand, if you’re an advanced trader, HKD stock may present a significant opportunity. As you know, any time volatility is high, movement in the market is commonplace – and as a trader, you have the opportunity to take advantage of that movement. 

However, if you plan to do so, it’s important that you’re well-versed in technical analysis. There are little-to-no fundamental ques that tell you where HKD shares are headed next. So, it’s important that you’re able to get your ques from the chart. 

Where Is HKD Headed Next?

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The truth is, nobody knows. If I was just looking at the pre-IPO fundamentals of the stock, I would have never guessed it would have flown so high so fast. What I do know is that, at present, HKD stock is significantly overvalued. As such, I’d be making my bets with the bears. However, as HKD has proven since the launch of its IPO, there’s no telling what’s going to happen next. 

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