Take advantage of technologyis the last company to file for Chapter 11 Bankruptcyand subsequently see its share price soar.
- The home retailer run by former Apple executive Ron Johnson went public via SPAC less than a year ago.
- Enjoy Technology stock has climbed 400% from its post-bankruptcy low as investors bet the stock could survive.
Shares of Take advantage of technology extended a two-day rally up to 400% on Wednesday after the home retailer filed Chapter 11
The price action makes Enjoy the latest company to file for bankruptcy and subsequently see its stock price soar, with investors betting there could be a deal that won’t erase 100% of the equity, as typically occurs in bankruptcy proceedings.
More recently, Revlon stock jumped more than 650% since its low post-bankruptcy filing, in the footsteps of Hertzwho originally defined the trend of retail investors send stocks through the roof despite impending bankruptcy rulings.
Enjoy Technology was founded by former Apple and JCPenney executive Ron Johnson and made his public debut via a SPAC less than a year ago. Enjoy’s service centered on a technology specialist who delivered technology products to consumers in their homes, while helping them with installation and configuration.
But lackluster sales, failures to control costs and an inability to raise cash by selling more shares in a painful bear market mean that Enjoy is now on the road to reorganizing its capital structure in court. bankruptcies.
The question is whether Enjoy’s shareholders will be left with anything after the bankruptcy proceedings, or will be wiped out completely as the company prioritizes paying off creditors, as typically happens in bankruptcy case. For now, retail investors are betting that there may only be some equity left in the company.
But that’s probably not a smart bet, as Enjoy has already reached an agreement to sell most of its assets to an appliance insurance company named Asurion, LLC. Asurion agreed to provide Enjoy with a $55 million loan to fund the company during its bankruptcy.
Enjoy also said it expects Asurion’s offer will be sufficient to fully repay all of its secured and unsecured creditors, but it did not mention the fate of current shareholders.
Enjoy saw a peak market valuation of $1.3 billion shortly after its IPO, according to data from Koyfin. Today, the company has a market valuation of around $50 million, which is down around 96%.