Prestige Wealth stock: Learn from TOP, AMTD and avoid PWM

Prestige Wealth Inc (NASDAQ: PWM) stock price made headlines on Thursday when it almost doubled on its first trading day. The shares jumped to $5.40 on Thursday, giving it a market cap of over $48 million. It then doubled in the pre-market session where it was trading at $10.86.

AMTD and Top Financial memories

Hong Kong-based companies have made a habit of going parabolic when they list in the United States. A few years ago, AMTD shares jumped, making its market cap bigger than that of Goldman Sachs, as we wrote here.

Most recently, Top Financial shares jumped to over $114 before plunging to the current $6.67. It is still unclear why these shares tend to do well after going public. My view is that these companies tend to engineer well-orchestrated pump-and-dump schemes that leave many investors holding the bag.

Prestige Wealth Inc is another company that has gained traction this week as its stock jumped. For starters, PWM is a Hong Kong-based company that provides wealth management and asset management solutions. 

According to its profile, the company helps its clients to identify and purchase wealth and asset management solutions. The profile adds that the company serves high-net-worth individuals in Hong Kong and Mainland China.

Avoid Prestige Wealth stock price

There are three main reasons why you should avoid the PWM stock. First, history suggests that these pumps tend to crumble, leaving many retail traders holding the bag. In the chart below, we see that AMTD and Top Financial stock prices have all plunged after going parabolic in their first days. Therefore, there is a likelihood that the Prestige Wealth stock will do the same.

TOP Financial and AMTD stock prices

Second, little is known about Prestige Wealth and its business operations. For example, by September last year, the company had just $702k in assets under management. Its income and revenue are not well-known for now. Its website’s investor relations provides no meaningful resources on its financial resources.

Third, it is always important to invest in companies that you understand well. In Prestige’s case, it has not provided more details about how its business works and how it makes money.