JJ Kinahan, CEO of IG North America, stated on Friday that investors in stocks like AMTD Digital (NYSE:HKD) soared more than 32,000% in less than a month on a surge of retail trader interest, should maintain the “correct perspective.”
In an interview with CNBC, the head of IG Group, an online trading company, described these stocks as “lottery tickets” and cautioned customers purchasing meme stocks not to think of them as viable long-term investments.
“This is not actually investing. This is taking a shot,” he stated.
“If you’re playing it like you’re playing a lottery ticket, that’s fine.” Kinahan continued, “but, if you’re playing this by saying you’re investing by playing in these stocks, well, that’s just a terrible premise overall.”
The CEO of IG North America described meme-stock trading as “fun” but “not healthy,” despite the fact that he sees some long-term benefits in the activity, including the potential to spark young people’s interest in the stock market as a whole, which may eventually result in more intelligent investing practices.
“The ends justify the means, I guess,” he added, “If this is the type of activity that has to bring younger people to the market so that hopefully they continue to participate in their 401(k)s.”
A provider of online entertainment platforms with headquarters in Hong Kong, HKD, went public in July through an IPO with a share price of $7.80. It immediately caught the market’s attention when it ended the first trading day at $27.80.
Eventually, on August 2, the stock soared to a peak exceeding $2,500. With a market value in the hundreds of billions of dollars, this signified a rise of more than 32,000% from the company’s initial IPO price. The company’s market valuation at its height was on par with companies like Walmart and Procter & Gamble.
HKD has dropped from that peak. Shares closed at $800 on Thursday after sharp declines over the previous two days.
The most recent HKD trading brought up memories of the peak meme-stock craze that drove stocks like GameStop (GME), AMC (AMC), and Clover Health (CLOV) to sky-high highs.
One of the original meme stocks, AMC, has dropped around 9% in Thursday’s premarket trading due to its quarterly earnings and dividend announcement.
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