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Enjoy Technology (NASDAQ:ENJY) has filed for bankruptcy, but ENJY stock soared about 80% yesterday and is jumping 68% in morning trading today. Shares began trading publicly last October after the company merged with a SPAC. Enjoy's shares were initially worth $1.1 billion.

Launched by Apple's (NASDAQ:AAPL) former head of retail, Ron Johnson, in 2014, Enjoy explained that it had decided to seek bankruptcy protection because it has had trouble raising money in the current macroeconomic environment.

Enjoy focuses on delivering popular consumer electronics products to consumers and then trying to sell them other offerings. The company has reached a deal "to sell most of its assets to device insurance company Asurion LLC, which has agreed to provide a $55 million loan to fund the company through bankruptcy," The Wall Street Journal reported.

What Will Happen to ENJY Stock?

In a June 16 article on Revlon (NYSE:REV), the well-known cosmetics company which sought bankruptcy protection in June, I explained that:

When companies declare Chapter 11 bankruptcy, their stocks typically lose nearly all of their value. That's because the rights of bondholders and other lenders are given higher priority under bankruptcy law than shareholders' rights.

Ultimately, the share price of bankrupt companies may rebound slightly from their lows. Or their stocks can be eliminated altogether, becoming worthless.

Therefore, at some point, ENJY stock is likely to become nearly or completely worthless.

Enjoy Is Johnson's Second High-Profile Failure

Johnson became CEO of retailer J.C. Penney in 2011 and his strategies were generally very poorly received by the chain's customers. As a result, he spent just 17 months in that executive role.

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On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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