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E-Home (EJH) Shares Rallied 40.5% on an $8M Share Buyback Plan. Should You Buy It?

Simon Mugo trader
Updated 4 Mar 2022

Trade E-Home shares Your capital is at risk

Key points:

  • E-Home Household shares rallied 40.5% on an $8 million share buyback plan.
  • Investors cheered the news given that E-Home market capitalisation is $27m.
  • Read on to find out if you should buy E-Home shares for your portfolio.

The E-Home Household Service Holdings Ltd (NASDAQ: EJH) share price rallied 40.5% after its board of directors approved an $8 million share buyback program.

Investors cheered the move, which is set to take place over the next nine months. E-Home’s market capitalisation fueled the massive rally in E-Home shares since it was worth approximately $24 million before the announcement.

Also read: Best Shares to Buy Now.

Therefore, the $8 million share buyback program represents almost a third of the company’s valuation. In addition, the share repurchases will be made on the open markets, benefitting current shareholders by creating significant demand for E-Home’s shares.

E-Home is a company that provides services split into comprehensive family services, including home-based elderly care, nanny and sister-in-law services, internet services, and home and hospital care.

The firm’s second division focuses on industrial and public cleaning services, operating four auxiliary roads, smart homes, and installing home appliances and maintenance.

The company said that the purchases would be timed based on the ongoing assessments of the company’s capital needs, market conditions and the price of the company’s ordinary shares, and other corporate considerations.

I will be watching E-Home’s share price to see if it will cross above the crucial $1 mark before the mandatory six months elapse, after which it could risk being delisted from the Nasdaq.

Xie Wenshan, E-Home’s Chairman and CEO, said: “We believe the share repurchase program represents our confidence in our strong business performance and in the long-term outlook for the household services industry in China. Our fast-growing strategy and solid operation have demonstrated profitable growth. We believe that the share repurchase program is consistent with our goal of boosting shareholders’ confidence and increasing shareholder value.”

In most investors’ minds, the question is whether E-Home is a good investment at current prices. The short answer is that E-Home’s share price has fallen 58% in 2022 but recently formed a bottoming pattern.

EJH shares have a solid fundamental incentive to keep rising, driven by the share buyback plan. However, investors should remember that this is a Chinese company and be ready to deal with the volatility that could arise from sudden changes in government policies.

*This is not investment advice. Always do your due diligence before making investment decisions.

E-Home Household stock price.

Tradingview chart of E-Home Household stock price 04-03-2022
Source: Tradingview

E-Home Household stock price rallied 40.48% to trade at $0.8714, rising from Thursday’s closing price of $0.6203.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading