Key points:
- Zovio’s stock price rose 29.9% despite unveiling liquidation plans.
- Retail investors bought its shares in a bid to push prices higher.
- Can Zovio stock become a meme stock? Read on to find out.
The Zovio Inc (NASDAQ: ZVO) stock price rose 29.9% after announcing plans to sell its remaining assets and liquidate the entire business. The company is looking for a buyer for its last remaining asset Fullstack Academy, an online coding and data analytics Bootcamp.
The company warned investors that it might not have enough cash to continue operating until it can find a buyer for Fullatck Academy. The company is running out of cash and could be ford to shut down its operations before finding a buyer for its remaining assets.
Also read: The Five Best Momentum Stocks To Buy Right Now.
Still, buyers flocked to scoop up Zovio shares, given that over 4.95 million shares had changed hands by writing this article. The rally was triggered by retail investors buying Zovio shares as they have done to create meme stocks in the past.
Could Zovio become a meme stock? The short answer is yes; the online education company could take advantage of the significant retail investor interest in its shares to raise money via a share issue. Still, it must do so quickly before its cash reserves run out.
At the moment, Zovio’s management team is focused on finding a buyer for its assets before liquidating the entire business. It plans to return up to $20.3 million to shareholders if it can find a buyer willing to pay up to $55 million for Fullstack Academy.
The company has set a possible price range for the academy of $34 million to $55 million. If the buyer pays a figure closer to the lower end of the range, shareholders will not receive a penny since the amount would only be enough for the company to repay its outstanding debts.
Zovio once had a booming business that generated over $1 billion in annual sales but has since fallen from grace after selling its Ashford University business to the University of Arizona in 2020. In May, the company also sold its TutorMe, an online tutoring business, for $55 million.
So, should you buy Zovio shares? Unfortunately, the short answer is no. The company is on its way to liquidation, and you could lose your entire investment.
*This is not investment advice.
Zovio stock price.
The Zovio stock price rallied 29.93% to trade at $0.20, rising from Thursday’s closing price of $0.153.
