Shares of digital solutions platform AMTD Digital (NYSE:HKD) gained relatively modestly in comparison to its meme-stock status on a very positive financial disclosure. Still, the diversified enterprise remains a highly speculative wager. Although AMTD stock represents a top-trending idea, its unusual profile and extreme volatility warrant caution.
According to a press release, AMTD expects to achieve a significant increase of over 50% in net profit following taxes for the fiscal year ended April 30, 2023, as compared to FY 2022. Further, the release goes on to state that “AMTD Digital has embarked upon impressive new innovative business approaches resulting in a strong momentum of growth trends and developments after its [initial public offering] listing last year.”
These business approaches encompass gains in AMTD’s media, entertainment and cultural components. Specifically, achieved milestones include the debut of AMTD World Media and Entertainment Group — an initiative that builds global strategies and forwards multimedia-related objectives — and the acquisition of The Art Newspaper, a visual arts journal.
Moreover, asset management firm AMTD IDEA Group (NYSE:AMTD) — which is the parent company of AMTD Digital — injected assets into its subsidiary at a fair market value of approximately $500 million and a net deal consideration of $268 million.
HKD Stock Offers Little Confidence Despite Big News
On the surface, a 50% profit increase should lead to robust returns, especially under the present ambiguous global economic environment. Unfortunately, investors have been largely unmoved by today’s disclosure, with HKD stock popping in and out of printing a positive return against the prior session.
Fundamentally, concerns center on the unusual nature of the overall business. While forwarding ambitious directives and marketing strong positions in target sectors, neither AMTD Digital nor AMTD IDEA command a particularly large footprint. The former entity carries a market capitalization of around $1.1 billion while the latter comes in at $327.3 million.
More significantly, securities tied to both enterprises have printed sharp losses. Since the January opener, HKD stock is down more than 40%. On the other hand, AMTD slipped 12.5% and is rapidly losing momentum. In the past five sessions, AMTD faded about 9%.
Especially for HKD stock, profiting from the trade requires a great deal of fortuitousness. Featuring sharp peaks followed by devastating troughs, it’s an extreme form of speculation at best.
Why It Matters
A little more than a month-and-a-half ago, InvestorPlace writer William White noted that AMTD Digital insiders promised not to sell HKD stock on the public market until August 2025. Framed as a dedication from its investors regarding long-term confidence in the enterprise, this effort may be a way to curb meme-like activity.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
