AMTD Digital’s stock is up 21,400% and amassed a whopping $250 billion market capitalization over the past week. Still, I dont think it’s another meme stock because of its profitability, innovative business model, and strategic geographic location.
AMTD Digital is a fintech company generating revenues from fees and commissions from its digital financial products.
Unlike brick-and-mortar financial institutions that lean on legacy systems and antiquated technologies to run their complex and opaque operations, neobanks operations are lean and adaptable, allowing some to be more profitable.
Is AMTD Digital a “meme” stock
The Hong Kong-based fintech company has been traded like a meme stock lately. Its American Depositary Receipt (ADR) started trading at $7.80 on July 15th. It traded at as high as $2,555.30 on August 1st. ADRs are shares of foreign companies trading on American stock exchanges.
The stock closed today, August 3rd, at $1,105.00, giving the company a current market cap of $214.708 billion, which is nearly $100 billion more than Goldman Sachs– the American multinational investment bank and financial services company.
Moreover, on August 2nd, AMTD Digital issued a ‘thank you note” to investors for its successful IPO completion. The company also said, “To our knowledge, there are no material circumstances, events nor other matters relating to our company’s business and operating activities since the IPO date.”
Besides the aforementioned meme-stock-like behaviors and the statement from the company, I don’t think it is because of the P-word-PROFIT.
For me, a meme stock means that the underlying organization has an unproven or obsolete business model without a clear vision of how to address it. AMC Entertainment Holdings, Bed Bath & Beyond, and GameStop all fit that mold.
In contrast, AMTD Digital is widely profitable with an excellent business model. In comparison to its market cap, its’ revenue is an enormous concern, but its sector total addressable market is hundreds and hundreds of billions.
AMTD Digital reported a profit of $22.1 million on revenue of $25.2 million in 2021 and a profit of $20.4 on revenue of $21.6 million in 2020 on its recent regulatory filings. Over the past two years, the firm, on average, recorded profits north of 90%.
More than half of the global population lives in Asia; most are unbanked and underbanked. The geographic area has the potential to give AMTD Digital a wide moat.
I would not buy the stock at the current price of $1,105 because there is a lot of irrational exuberance, but it is far from being a meme stock.
