Key points:
- The Enjoy stock price is rising despite the company facing bankruptcy.
- Retail investors are betting on Enjoy avoiding bankruptcy.
- What comes next for the firm? Read on to find out.
The Enjoy Technology Inc (NASDAQ: ENJY) stock price rallied 68.54% today, adding to Tuesday’s 81.% rally as buyers took over from sellers. Over 23 million ENJY shares had tarded hands at the time of writing as retail investors bought the shares.
The company, which operates mobile retail stores that serve customers from the comfort of their homes, filed for chapter 11 bankruptcy protection on 30 June 2022. the move was triggered by a cash crunch that had left it unable to meet its weekly payroll commitment. The firm had $523,000 in cash, which was insufficient to cover its next weekly payroll.
Also read: The Best Cheap Tech Stocks Under $10.
However, Enjoy technology announced that Asurion, a private firm that sells insurance for smartphones, tablets, consumer electronics, and appliances had decided to come on board and provide debtor-in-possession financing under a deal that would make Asurion the stalking horse bidder in a bankruptcy auction.
Investors expect Enjoy Technologies to exit bankruptcy protection in much better shape than it entered, which explains the buying frenzy that has recently engulfed the company’s shares. However, despite the buying frenzy, Enjoy still faces significant “logistic, supply chain, and manufacturing challenges.”
Meanwhile, retail investors are piling into Enjoy stock in droves due to its low prices and the likelihood that the shares could recoup some of their losses and rally much higher if the company manages to avoid bankruptcy.
The action in Enjoy Technology’s stock is reminiscent of the action we saw last year in meme stocks where retail trades saved companies such as AMC Entertainment and Hertz from bankruptcy, allowing them to rebuild their operations and regain a foothold in the market.
Enjoy shares were trading higher after the market opened extending its premarket gains as the bullish momentum continued. However, given the company’s challenging fundamentals, I would not buy the shares.
Still, a tie-up with Asurion might inject new life into the company, given that the two firms offer complementary services. Asurion will probably leverage Enjoy’s network of mobile stores to expand its repair and service network in the United States.
*This is not investment advice. Always do your due diligence before making investment decisions.
Enjoy Technology (ENJY) stock price.
The Enjoy Technology stock price had soared 73.26% to trade at $0.5371, adding to yesterday’s 81.5% rally.
