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Zovio Stock Surged 87.4% Despite the Lack of News. Here’s Why.

Simon Mugo trader
Updated 18 Oct 2022

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Key points:

  • Zovio stock surged 87.4% despite the lack of news from the firm.
  • The company is currently looking for a buyer and could be liquidated.
  • An influx of buyers was behind the latest rally. What’s next?

The Zovio Inc (NASDAQ: ZVO) stock price surged 87.4% despite the company’s lack of news releases today. The mover higher was driven by an influx of buyers as over 32 million shares had changed hands at writing as buyers flocked in.

While there might be no apparent reason behind today’s rally, we must look at previous releases to see if there are any clues as to what could be behind today’s rally. The last significant announcement from Zovio was in late September when it revealed that it was looking for a buyer for all its assets and the entire business.

Also read: The 5 Best Growth Stocks To Watch In 2022.

Could the company have found a buyer but is yet to notify the markets since negotiations are in the early stages? Yes, this is entirely possible since most companies may choose not to reveal that they are in talks with a potential acquirer until they know that the interested firm is serious.

In my last article on Zovio, I mentioned that the company could become a meme stock since its shares rallied after announcing plans to liquidate its assets, which is the opposite of what typically happens when a company makes such an announcement.

Zovio could be headed towards meme stock status as retail investors, typically the largest buyers of penny stocks, buy its share as they look to squeeze out any short sellers and push the company’s stock price higher.

However, retail investors buying Zovio shares should remember that chasing such a stock higher is usually a question of who will be left holding the bag. Given that companies like Zovio usually do not have much intrinsic value, the move higher is always driven by investor sentiment.

So, would I buy ZOvio stock? The short answer is no. The company has minimal intrinsic value and is on the verge of liquidation. Common shareholders might get nothing if the company does not find a buyer who can pay $55 million to acquire its last asset Fullstack Academy.

*This is not investment advice.

Zovio stock price.

Zovio stock price 18-10-2022
Source: Tradingview

The Zovio share price surged 87.38% to trade at $0.2702, rising from Monday’s closing price of $0.1442.

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