Enjoy Technology, a venture-backed mobile retail upstart that went public via SPAC last fall, announced it has “initiated a review of strategic alternatives” as it anticipates existing cash resources will not be enough to fund the business beyond next month.
Launched in 2014 and backed by a number of prominent venture firms, Enjoy is co-founded and led by Ron Johnson, a longtime retail executive known for his role in developing Apple’s stores. The Palo Alto-based company operates a network of “mobile retail stores” for at-home purchases of smartphones and other higher-end devices.
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Prior to going public in October, Enjoy raised over $230 million in known venture funding, per Crunchbase data. Backers include consumer-focused venture investor L Catterton, Kleiner Perkins and Oak Investment Partners.
The company pitched itself as a potentially more convenient retail channel for consumers looking to buy a new smartphone or other pricey electronic device that typically comes either from a brick-and-mortar store or shipped in a box. With Enjoy, customers could opt to have a representative meet them at home, deliver the product, and walk through setup and other questions.
The pitch also resonated with at least one special purpose acquisition company (SPAC). Enjoy announced in April 2021 plans to go public through a merger with a blank-check acquirer, Marquee Raine Acquisition Corp. It completed the merger in October, raising more than $250 million gross in growth capital over the course of the transaction.
Since shares began trading under the new ticker symbol, ENJY, the stock price trajectory has been persistently downward. After hitting a post-merger peak above $10 in October, the stock fell to under $4 in January and remained at that level through April.
Shares have taken a deeper tumble in roughly the past month, amid a broad tech stock selloff and investor concerns about the company’s history of steep operating losses.
The stock was down around 50 percent in Tuesday trading, falling below 40 cents per share, following Enjoy’s latest earnings disclosure Monday afternoon. In that announcement, the company said it earned revenue of $24 million in Q1 and posted a net loss of $55.2 million, along with an adjusted EBITDA loss of $51.5 million.
Cash reserves have dwindled amid continued operating losses. Enjoy disclosed that its board “has initiated a review of strategic alternatives, including a potential sale, merger or other strategic transaction, and of the company’s financing strategy.”
For now, Enjoy says it has secured interim financing of $10 million from an unnamed “related party” to help fund its operations as it pursues strategic alternatives. That brings the company’s estimated cash and cash equivalents to around $36 million as of last Thursday.
The company said it is in discussions with multiple financing sources to attempt to secure additional interim financing to fund its operations and other liquidity needs. Without fresh financing, Enjoy says, its management “anticipates that existing cash resources will not be sufficient to meet operating and liquidity needs beyond early June, 2022.”
Illustration: Dom Guzman
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