Shares of AMTD Digital ($HKD), an Asian fintech company little-known in the U.S. before this week, surged 21,400 percent to a high of $2,555 per share on Tuesday, temporarily giving it a market capitalization in the range of PepsiCo and Toyota. While the company's stock slid more than 40 percent on Wednesday for a time, it was still worth around $120 billion. 

How did this happen? Did AMTD cure cancer? Did it solve climate change? Or maybe it released some kind of Tesla-Xbox-iPhone hybrid that will soon find itself in every garage, living room, and palm? The answer is none of the above, but don't ask the company for any insight on what's going on here. According to them, it's a great, big mystery. 

"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," AMTD said in a statement issued after the rally. "The Company is also monitoring the market closely for any unusual trading activities or abnormalities, and would continue to maintain our communication channel wide-open to the public through our Investor Relations Office."

Indeed, AMTD Digital reported just $24 million in net profit in the 10 months through February 2022, and while its business model — providing digital financial services to a network of Asian entrepreneurs and corporates — could hold promise, it's unclear why this little-known fintech firm is now the hottest stock on Wall Street. 

Checking the headlines of the financial press, the answer seems clear enough. Many are referring to AMTD as a "meme stock," putting it in line with companies such as GameStop and AMC that have ridden waves of support from gung-ho retail investors. 

Based on the buzz coming out of r/WallStreetBets and other social channels, it's possible amateur investors are glomming onto the company, especially as the media picks up on the price spike, but some investors argue this isn't a classic meme stock. 

"The number of shares traded of HKD is not massive, so it doesn't suggest that there's widespread retail adoption, but there has been some," said Nate Anderson, an activist investor and founder of Hindenburg Research.

For some perspective, a few hundred thousand shares of $HKD traded on Tuesday, whereas hundreds of millions of shares of GameStop traded at the peak of meme stock mania in 2021, and the video game retailer still only reached a market cap of around $15 billion. In addition, GameStop's share price peaked at $483 apiece, whereas AMTD is now well above $1,000 per share, in theory making it less accessible to retail investors. 

He's not the only one voicing skepticism about AMTD's status as a meme stock. "$HKD is NOT a meme stock," Citron Research tweeted Wednesday. "While sure price is stupid, it only traded 339k shares yesterday. Has not captured the imagination of retail traders like $GME [GameStop]." 

But if retail investors are not to blame, what is really going on here? Anderson explained that it comes down to supply and demand: A relatively small number of shares are seeing a relatively high level of trading activity.

"There just aren't that many shares to be freely traded post-IPO, and in those circumstances, any sort of tailwind can act on price," he said. "We've seen that with SPACs. We've seen that with these smaller, offshore issues, where any kind of positive news or momentum can really send things souring."

He also pointed out that AMTD Digital's parent company, AMTD Idea Group, has a track record of underwriting public offerings for stocks that ultimately crash and burn. "AMTD has an underwriter that has taken numerous companies public that have had their shares spike and suddenly implode. I'd be hard pressed to imagine that those are all remarkable coincidences," he said. 

One example is the China-based crypto company Ebang. According to Hindenburg Research, the company directed $103 million of its IPO proceeds into bond purchases linked to AMTD Idea Group, which underwrote the offering in the first place. Ebang's stock today is worth 48 cents, after peaking at over $10 per share in 2021. 

In addition, AMTD Digital CEO Calvin Choi has a history of drawing accusations for financial malfeasance. In June, Hong Kong’s securities regulator sought to ban Choi from the industry for two years for professional misconduct, according to a Caixin Global report. 

None of this proves that AMTD Digital and its recent price surge is the result of a scam or a pump-and-dump, but it does raise a number of red flags, said Anderson. 

"It looks incredibly sketchy, and I'm not surprised to see a name associated with AMTD spike in a suspicious fashion," he said. "One thing that is likely is that HKD will come crashing down, and there will, in all likelihood, have been some people who were roped in on the way up who will lose their money."